Equity Bottom-Up

• In C4Q22, We expect Grab to report total revenue 2% higher than cons., and non-IFRS net loss narrower than cons.. 
• With competitors cutting back on heavy incentives, Grab has gained share under easing competitive environment in food delivery market in 2022. We expect this trend to sustain in 2023.
• Mobility is expected to benefit from rebound of tourism and generate stable margin. Pullbacks from off-platform financial services continue to support improvement. Maintain BUY and raise TP to US$ 4.0.

• Q & M Dental Group (Singapore) (QNM SP) is the largest listed pure dental play in Southeast Asia. For the 9M2022, core healthcare revenue increased 3% to S$125.9M.
• Comparison of the numbers over five quarters to mitigate any impact of changes in the economic and business environment shows core healthcare revenue exhibits a secular uptrend.
• During 9M2022, Q&M added seven and four dental clinics in Singapore and Malaysia, respectively, bringing the company’s total number of clinics to 106 in Singapore and 45 in Malaysia.

• Era of the value stocks! Inflation feeds interest rates, raises cost of capital and risks equity multiples. Headwinds to earnings growth – risks sustenance of pricey valuations.  
• Key risks: Stocks face material headwinds on cost pressure, competition, valuations 
• Stocks covered: Crompton Greaves, Stove Kraft, Lemon Tree, Jubilant Ingrevia

• Consumer mobile revenue fell 7% but that partly reflects how sales were reported a year ago. Reported ARPU was down 5% whilst price cut erosion narrowed
• Operating income YTD is 94% of full-year targets leaving room for Softbank to achieve its goal even with increased investment spending
• This was a relatively uneventful quarter and we remain at Buy

• We believe that Jeju Air is in a sweet spot right now. Jeju Air is one of the major beneficiaries of the travel resurgence in Asia.
• Jeju Air is a potential inclusion candidate in the KOSPI 200 index in 2023. There are 42 companies in KOSPI 200 which have lower market cap than Jeju Air. 
• Outbound travel from Korea recovered strongly with 6.6 million outbound tourists from South Korea in 2022, up 436% YoY. However, this is still 77% lower than the figure in 2019. 

• SK Biopharmaceuticals Co Ltd (326030 KS) is reporting continued stellar performance of its flagship drug Xcopri (cenobamate) in the U.S., with 9M2022 sales rising 137% YoY to KRW119B.
• Since its launch, Xcopri maintained strong momentum in US in terms of prescription volume. Xcopri reported 1.8x higher launching TRx than recently launched competitive anti-epileptic drugs (AEDs).
• The company plans to launch cenobamate in the Middle East and Africa this year, following launches in the U.S., China, Japan, and major countries in Europe.

• Intel delivered a weak result, failing to meet Wall Street expectations in terms of revenues as well as earnings given the persisting macroeconomic headwinds in the semiconductor industry.
• Intel continues to integrate AXG into CCG and DCAI to deliver a more effective go-to-market capability, accelerating the scale of these businesses while further cutting costs.
• The management believes their first EUV-deploying modes, Intel 4 and 3, will significantly improve transistor performance per watt and density.

Picton Property Income’s (PCTN’s) Q323 report shows asset management and leasing activity continuing to grow rental income. This provided a partial offset to strong market-wide pressure on property valuations in response to higher interest rates, while moderate gearing mitigated the impact on NAV. Although the NAV total return was a negative 11.7%, PCTN appears to have delivered strong outperformance relative to MSCI indices and those immediate peers that have so far reported.

• Comcast achieved a strong result that surpassed Wall Street expectations in terms of revenues as well as earnings.
• The company is slowly growing its ARPU as it is working towards building its customer relationships by steadily introducing new capabilities, services, and benefits.
• In 2023, ARPU growth should continue to be the main factor influencing their residential broadband revenue growth.

• Amazon’s share price has fallen 25% since April of last year, sparking a fear of missing out.
• The pressure for cost-cutting measures will likely increase as profitability and free cash flow remain elusive, according to Amazon.
• Amazon has seen a 25% drop in its share price in January.

• Likely new 4G restrictions will delay Huawei’s ability to launch mid-range offerings at volume. Xiaomi stands to gain 1.2ppts of share in 2024 vs. our prior forecast. 
• However, new limits are long-term negative, as it (1) raises the chance for cascading limits on China 3Cs; (2)  triggers reduced 3C electronics demand; (3) weaker industry electronics demand.
• The impact of the latest set of restrictions will likely prove net negative, in our view, as a result we re-iterate our SELL rating and HK$7.3 TP.

• Sony’s Q3 operating profit fell 8% YoY to Y428b beating consensus estimates by around 15%
• The PS5 has now sold over 32m units, finally shaking off supply constraints. Will VR2 surprise?
• We remain bullish on the stock at 15x earnings. Sony is a core play on content creation and digitization.

• There is only one large, liquid, listed, internet bank in all of the Asia-Pacific markets
• Earnings have been strong, with uplift in NIM and loan balance to support this
• Regulatory change to provisioning not likely to affect this bank, but big peers

• Kyocera cut FY Mar-23 operating profit guidance by more than 30% while leaving sales guidance unchanged. Draw your own conclusions about the reliability of company forecasts.
• Sales began to decline in 3Q and the rate of decline is likely to increase in 4Q. There is a large inventory overhang.
• The shares dropped 3% today. Wait for capitulation as the reality of recession sinks in.

• Meta lowered 2023 expense guide by $5B (or 5%)  to $89bn-$95bn and capex guide by $4B (or 11%) to $30bn-$33bn
• Metaverse spending continues, META lost $4.3B on $700M in revenue this quarter and losses are expected to accelerate in 2023. 
• Zuck said the word efficiency 18x and AI 15x…Evidently, these are his priorities!

• Management has cut its FY23 EBITDA target from its long-term goal of ¥390bn to c. ¥363bn as its core ad and eCommerce performance gets weaker
• Advertising revenue fell 1% YoY whilst eCommerce volumes (GTV) on the core third-party marketplace Yahoo!Shopping were also down significantly
• The outlook for FY23 is further blurred by management changes to address business challenges and deeper LINE/Yahoo integration.  We are lowering our target price to ¥425

• Robust medium-term earnings growth, softness in commodities to ease margin pressure.
• Beneficiary of new energy capex, likely blending of Compressed Biogas with CNG furthers capex outlook.
• Stock has corrected 45% from peak, valuations turn more reasonable.

• Takeda Pharmaceutical (4502 JP)  reported 3QFY03/2023 results today. Reported revenue increased 11.2% YoY to JPY1,096.6bn (vs consensus JPY996bn) while OP increased 26.2% YoY to JPY147bn (vs consensus JPY180.1).
• The drop in OP vs consensus was mainly due to the depreciation of the Yen, nevertheless, OPM improved 30bps to 13.4% during the quarter.
• Takeda has not revised full-year forecast, however, we think the company will easily beat its own guidance as it pushes forward with its development pipeline further aided by M&A.

• Shineway released good turnover data in 22Q1-Q3. Due to large market demand for COVID-related TCM, 22Q4 performance would remain strong growth momentum, leading to positive outlook of 2022 annual report.
• With the peak of respiratory disease outbreak past and COVID-19 also begins to be under control, demand for related TCM would weaken. Accordingly, the pullback of share price could begin.
• Strong performance of Shineway’s share price may not be sustainable in long term. Shineway is no longer cheap at current valuation. While short-term catalysts remain, future upside may become limited. 

• Core mobile revenue fell 4% but that is an improvement from 7-8% declines over the last few quarters and including value-added sales (VAS), retail mobile spend is up
• Competitive challenges remain with elevated churn and visible declines in roaming revenue from Rakuten (although sequential change has been modest)
• KDDI has kept guidance for FY22 operating income growth unchanged despite unanticipated expenses for rising fuel costs and the July network failure

• In this deep dive report, we initiate coverage on Softbank Group with a ¥6,300 target price and Neutral recommendation
• We are cautious on global tech and consider that the main risk to the story but a recovery in China sentiment provides some offset
• For Q3 results next week, we expect the defensive theme of the last two quarters to continue

• We expect a 10,000-12,000 Rph dividend for FY22 (div yield 28%-33%) from Indo Tambangraya Megah (ITMG IJ) as earnings are set to improve >70% HoH (H1 dividend – 4128 Rph/share).
• With coal prices remaining elevated, if volumes remain flat YoY, we could see >50% of the stock price returned in dividends throughout FY22e/23e.
• There is an excellent margin of safety, with almost 40% of the market capitalization in net cash. With a >65% payout ratio, we will see cash levels build further. 

• Konan Technology is one of the competitors to Open AI (Chat GPT) in Korea. 
• Konan Technology’s share price is up more than 4x this year. We would not chase the stock at current levels. We provide a framework of valuing Konan Technology. 
• Four large Korean companies that could be long-term winners in AI space in Korea include Naver, Kakao Corp, SK Telecom, and KT Corp. SK Telecom owns 20.8% of Konan Technology. 

• We expected the market to react positively to the Q3 beat. There are clouds on the order horizon, but that is well-known
• A big management shuffle was also announced. We think the new CEO and CFO will follow the same LT Vision, but need to do more to meet rising capital costs
• Our core bullish thesis rests on growth in Industrial Automation.  As expectations for interest rate hikes fade, we think investors will start to price in a 2023/4 order recovery

Kazia Therapeutics has released its Q223 activity report and provided a business update for the quarter. Q2 was marked by increased preclinical efforts towards exploring the applicability and efficacy of paxalisib in non-central nervous system (CNS) oncology indications such as melanoma and other solid tumors, including breast cancer. Post-period, Kazia announced a A$4.5m fund-raise through a two-stage private placement of 40.9m new shares (25.4m unconditional shares and 15.5m conditional shares) at A$0.11 per share. Management intends to use the proceeds to support its development programs (including the paxalisib GBM AGILE study due to readout in H2 CY23) and working capital requirements. The period-end net cash balance stood at A$4.4m and this, along with the A$4.5m fund-raise, should provide headroom into H2 CY23, based on current burn rates.

• Inline performance and inline guidance…the stock mistakingly traded down on Tinder’s optically weak sub growth.
• Longer term, CEO BK Kim is making the right moves reorganizing the company to focus on the growth engines (Tinder, Hinge), the idiosyncrantic drivers (Asia), and cost cutting (Evergreen Brands).
• Reiterated 2023 guidance will prove conservative, with the stock still trading at alltime lows despite the 30% move up so far this year…we buy this dip.

• As expected space segment revenue growth accelerated as global/mobile sales took off offsetting media revenue erosion
• User trends in the video business remain weak although Q3 subscriber losses improved QoQ despite this being the seasonally weakest quarter
• We are leaving our forecasts unchanged and remain at Buy

• Cosco Shipping Energy Transportation (1138 HK) rallied 12.5% in the last two trading days after issuing a FY22 positive profit alert, but we are concerned that momentum is peaking. 
• Its P/B of 0.92x is 4SD above average since 2016, more than sufficient to reflect rebound in FY23-24F profitability. Meanwhile, VLCC rate has plunged 80% in the last 3 months.  
• We believe CSET is already midway in the upcycle which normally lasts for 2-3 years. With high 4Q22 profit difficult to sustain for long, there is downside risk on earnings.  

• IBM delivered a strong result for the last quarter and managed an all-around beat as a result of excellent execution with respect to its AI and hybrid cloud strategy.
• It delivered decent revenue growth in its business across geographies, infrastructure segments, consulting, and software.
• The company added a series of innovative IBM software offerings in the AWS marketplace available as-a-Service.

• Lam Research ended the previous year on a strong note and posted an all-around beat in the last quarter.
• The CSBG revenues in the company’s installed base business expanded faster than its growth in the installed base units.
• We provide the stock of Lam Research with an ‘Underperform’ rating with a revision in the target price.

• Aided by the Japanese Government’s efforts to rebuild the COVID-ravaged leisure sector, Oriental Land (4661 JP)’s 3QFY23 OP surpassed consensus by more than 35%.
• We believe 3QFY23 could be a peak in terms of financial performance for Oriental Land, at least until the opening of the Fantasy Springs.
• In addition, the growth story that OLC offered through the expansion of DisneySea, seems to be no longer compelling as the management has simply stopped talking about its progress.

• Delta Thailand has surged post SET50 re-inclusion and the stock has dramatically outperformed both Delta Taiwan and Thailand’s SET Index.
• For both stocks, forward growth rates are expected to be similar for 2023E and 2024E.
• Delta Taiwan’s stake in Delta Thailand alone is now worth nearly 90% of its market cap.

• GoTo’s share price lost more than 75% last year following its weaker-than-expected performance and lock-up expiry despite the company entering into a coordinated secondary offering of shares with pre-IPO shareholders.
• The company’s share price has moved up 24% YTD partially driven by cost cutting measures that is expected to improve the company’s profitability.
• Nevertheless, we expect this share price rebound to be temporary with e-commerce and food delivery market in Indonesia slowing down.

• Ace Hardware has been a distinct laggard amongst listed retailers in Indonesia, with its valuations drifting to multi-year lows, given a slow recovery from the pandemic and limited digital strategy. 
• The company has continued to see lacklustre SSSG finish flat for last year but has recently opined a more optimistic outlook for 2023, planning to open 10-15 new stores.
• Ace Hardware Indonesia (ACES IJ) trades on 13.7x FY2023E PER and 12.7x FY2024E PER when it used to trade on twice that multiple with not dissimilar growth rates.

• Komatsu Q3 operating profit rose 54% YoY, beating analyst estimates by around 12%
• Construction and Mining Equipment sales rose 31% in the quarter, or ~10% on a constant currency basis versus industry volume of -6%
• Komatsu shares have sharply lagged the recovery at CAT. We still see significant upside with current P/B of 1.2x

• MMP Industries (MMP IN)  is mainly engaged in the business of manufacturing, selling and distribution and trading of aluminum products such as powder, pyro and flake, paste, foils etc.
• The company has been on the main board of NSE since F20 but however, its financials are plagued with several forensic concerns.
• We highlight takeaways mainly related to negative cash flows and their misrepresentation in reporting standards. Additionally, the company is also engaged in various secretarial audit woes.

• Bank Mandiri (BMRI IJ) finished the year with a strong showing of loan growth across the board driven by corporate and commercial loans but micro was also a feature. 
• Both the bank’s consumer app under Livin’ and its digital corporate platform under Kopra continue to help drive CASA growth and transactions plus the bank is opening “smart” branches. 
• Bank Mandiri (BMRI IJ) is optimistic about the outlook for loan growth and NIMs in 2023, with its digital initiatives continuing to gain traction and drive growth. Valuations are attractive.

• In 2022, Samsung Biologics (207940 KS) posted record-high consolidated revenue of KRW3 trillion and, driven by new orders, efficient plant utilization, and inclusion of Samsung Bioepis as a wholly-owned subsidiary.
• Plant 4 is on track to be completed in H12023, with active pre-sale activities are rapidly locking in capacity. Strong order momentum continued, with 2022 CMO contract amount of $9.5B.
• Samsung Bioepis reported revenue growth of 12% to KRW946B, driven by stable sales of existing products and new product launch. Humira biosimilar launch in the US is the biggest catalyst.

• Samsung reported 4Q22 detailed results – Semiconductor earnings evaporated and its memory subsegment likely lost money.
• Samsung re-iterated that it would NOT cut capex despite the market downturn – Samsung appears ready to endure losses which is negative for Nanya Tech, SK Hynix, and Micron.
• Japan and the Netherlands have joined the U.S. with chip technology restrictions for China – Hon Hai is a net winner.

• Hon Hai’s upcoming results date hasn’t yet been publicly announced, but last year it was 16 March.
• Gross margin could come in well below consensus, and net profit could be minimal for 4Q22E. Look for reiteration of its longer-term margin target from management.
• We remain structurally bullish on Hon Hai and see it as positioned favorably relative to U.S. China semiconductor restrictions. Our TP for Hon Hai is $155, over 50% above today.

In the next installment of our Webinar Wednesdays, we go live with Smartkarma Insight Provider, Travis Lundy as he gives us a quick rundown about what is the current situation that is happening with Adani Enterprises and where they are headed from this point on.

The webinar will be hosted on Wednesday, 1 February 2023, 17:00 SGT/HKT.

Travis Lundy has 20+ years of experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies, with most of that time spent managing money.

• We believe total revenue growth rate will accelerate from 4Q22 and grow by 9% in 2023.
• We believe the operating margin will be stable from 4Q22 to 2Q23, but the margin will climb up from 3Q23.
• We believe that EPS will increase by 16% and the stock will have an upside of 21%~44%.

• Inventory levels rose to highs in 3Q22 — Now increased margin pain may come through as we move through the latest earnings season.
• Forecasts still assume relatively strong margins vs. history and thus appear at risk of disappointment.
• Earnings forecasts, while assuming a down-cycle, are still assuming a relatively benign down-cycle.

• Two of the biggest department store chains in Japan, H2 O Retailing (8242 JP) & Isetan Mitsukoshi Holdings Ltd (3099 JP) are set to disclose FQ3 earnings this week.
• The ones with FQ3 ending in November, J Front Retailing (3086 JP) and Takashimaya (8233 JP) surprised to the upside with 6% and 8% price gains on earnings.
• Our analysis indicates that H2O Retailing & Isetan Mitsukoshi could deliver stronger FQ3 results. Thus, we would look to trade Japanese Department Stores before earnings this week.

• We remain bullish on NEC as we believe that the company is one of the key beneficiaries of the shift to standalone 5G
• NEC’s Network Services registered double-digit revenue and profit gains in Q3 on the back of growth in 5G equipment sales and IP income.
• We believe that the current share price (+4% over the past 12m) and valuation (10x PE, 0.8x PB) do not reflect the positive mid-term outlook

• Kasikornbank PCL (KBANK TB) remains one of Thailand’s top-tier banks with particular strength in SME lending and consumer lending making it a beneficiary of both consumption and tourism recovery. 
• The bank continues to grow its digital banking and business through its K PLUS app which now has more than 21m users, with multiple use cases and self-apply loan applications. 
• Kasikornbank remains a core holding for exposure to Thailand’s tourism-driven recovery through its SME exposure. Valuations are attractive with the bank trading at 0.7x FY2023 PBV and 8.3% FY2023E ROE. 

• Gujarat Ambuja Exports (GAEX IN) is an Agro Processing conglomerate having a diverse product profile across oil seeds, edible oil refining, maize and starch, cotton yarn, wheat processing, etc. 
• Our forensics primarily include the takeaways on MACPPL acquisition, its true rationale, accounting impact on the balance sheet and few disclosure errs.
• Other major takeaway relates to capex story and grey areas relating to the capacity size and timely completion, especially for its marquee plant in Malda.

• Bukalapak (BUKA IJ)  is one of Indonesia’s most differentiated digital economy players plus it is unusual in that it has one of the longest runways amongst peers at 15 years. 
• Despite operating a marketplace model, the platform uses this to generate traffic for its other businesses including its O2O Mitra Bukalapak business and its growing online speciality store business. 
• Bukalapak (BUKA IJ) also has strong ESG credentials, the most obvious of which is in the empowerment of MSMEs through its Mitra business. It is also making headway toward profitability.

• Nihon M&A Center (2127 JP) reported 3QFY03/2022 results. Revenue declined 9.9% YoY to JPY9.8bn (vs consensus JPY13.6bn) while OP dropped 21.9% YoY to JPY3.2bn (vs consensus JPY6.1bn).
• Though there had been an increase in the no. of transactions completed during the quarter, revenue declined due to price pressures.
• Share price has declined 22.8% during today’s trade due to weaker-than-expected earnings and we think full-year FY03/2022E guidance is too hard to achieve.

• This is our second Insight into Tobila Systems – the absolute dominator in the niche of fraud/spam call and message filtering services in Japan;
• We like the high-quality, unique assets owned by the company, although capital allocation appears to stand out as a wild card in our formula of long-term shareholder-value creation;
• At the current level, we would hold the shares firmly and wait patiently for more opportunistic offerings from Mr. Market to accumulate more shares.

• TSMC’s ADR premium is in the double digits, representing a major breakout.
• ASE Technology’s premium is also in the double digits and the company will be reporting results next week.
• Chunghwa’s premium is high for its tight range, and results will be coming out for the company this week.

• China catering players have seen strong recovery during the Chinese New Year starting from Jan 22th, amidst a broad-based revival of the service sector as a whole.
• For Xiabuxiabu, latest data points suggest significant progress in turnaround and higher visibility into 2023 performance.
• We see upside to our financial projection for 2023 and are more confident that Xiabuxiabu is the most attractively-priced to play re-opening in China catering sector. Expect 50% upside.

• Intel reported weak results at the end of last week, with its PC segment hit worst.
• PC total addressable market to fall by 7.5% based on Intel’s guidance.
• Asus and Acer inventory levels show the problem impacting Intel, and for the industry as a whole right now.

• ST reported solid Q4 results, 4% above consensus expectations at the EBIT level. Q1 2023 guidance is much better than consensus expectations on sales (11% beat) 
• ST confirmed its view that 2023 will be another growth year, with sales indicated at US$17.3bn, which is +7.5% year over year and well above consensus
• Stock is up 21% since our initial note. We still see over 30% upside from here

• Cipla Ltd (CIPLA IN) reported revenue growth of 6% in Q3FY23. Ex-COVID revenue growth was 11%. Despite price erosion and surging R&D investment, EBITDA margin expanded 153bps YoY to 24.2%.
• Ex-COVID India business recorded 11% revenue growth, driven by double-digit traction in core portfolio across therapies and business segments. Branded prescription business reported seventh consecutive quarter of market beating growth.
• US business recorded record high revenue, representing 30% growth in USD terms. Strong traction in respiratory products was further propelled by new launches including peptides. In December, Cipla launched leuprolide.

• Dr. Reddy’s Laboratories (DRRD IN) recorded record high revenue, EBITDA, and net profit in Q3FY23, driven by US business. The company generated healthy cash flow of INR20B during the quarter.
• Revenue from North America surged 64% INR30.6B, driven by new products launches, increase in volumes, and a favorable forex movement. gRevlimid contributed ~34% of North America revenue.
• The company plans to launch ~30 products in the U.S. market in FY24. With the pipeline shifting toward complex products, Dr. Reddy is well-positioned to maintain double-digit revenue growth.

• Digital Publisher BuzzFeed’s stock has seen an epic rally in the past week, with most of the gains driven by the company’s decision to use Artificial Intelligence tools like OpenAI’s ChatGPT to build quizzes and write content.
• Essentially, investors have been cheering about the potential for improved profitability and content that can be written at scale by using these various tools.
• This is a welcome change for the media outlet, which has seen its advertising revenues plummet, its site traffic decline across the board, and its balance sheet crumble.

• Thungela’s Goedehoop mine continues to deliver robust results, but most of its assets are underperforming.
• The stock’s more than 35% ex-post dividend yield had many investors excited.
• Nevertheless, cyclicality could play its hand soon, according to the canary.

• On 27 January, LG Energy Solution provided financial and operational guidance for 2023.
• We believe that the consensus is likely to reduce sales estimate by 3% and operating profit estimates by 10-15% in 2023.  
• Out of the total of 3.4% of ESOP shares, about 0.5% to 1.5% of the shares could be sold in the first few weeks after the end of the lock-up. 

• Jabil’s Q1 performance was impressive and the company delivered an all-around beat which helped propel its stock price.
• The company’s strength resulted in the quarter’s double-digit rise in revenue, core operating income, and core diluted profits per share.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Kimberly-Clark delivered a mediocre performance in the last quarter of 2022 as it failed to meet the revenue expectations of Wall Street.
• Despite that fact, the company managed to get 1/3rd of profit from the international market in the last quarter.
• The new products created by Kimberly-Clark in the last 3 years have contributed to 60% of the total sales growth in 2022.

• Despite a series of macroeconomic challenges, Dropbox had a good last quarter and managed an all-around beat.
• They also continue to return a sizable percentage of their free cash flow to shareholders through share repurchases.
• Although they are experiencing moderate growth in their Sign business, it is important to set Dropbox Sign apart from conventional eSign solutions.

• Schlumberger maintained its growth momentum throughout the fourth quarter, producing significant revenue growth and additional sequential and annual margin increase.
• They had sequential revenue growth and margin expansion in North America and internationally.
• On the other hand, exploration data sales, INNOVATION FACTORI, and AI solutions saw a significant increase in the digital sector.

• Textron delivered a decent result in the last quarter with revenues of $3.6 billion which surpassed Wall Street expectations.
• The company faced a strong demand, a strong pricing net of inflation, and a higher aftermarket volume in this quarter.
• It was a quarter of strong customer demand and solid cash flow.

• Levi Strauss had a successful fourth quarter with strong fiscal 2022 performance.
• Levi Stauss managed to enhance its brand positioning and market share in the global market.
• 40% of the company’s revenues came from outside of denim bottoms in this quarter.

• Central Retail Corp remains a core holding to play the retail recovery in Thailand and Vietnam, with the tailwind from the recovery in tourism providing an additional boost. 
• The company has seen a dramatic recovery in its fashion business along with higher margins plus it is expanding new stores and launching new formats such as Tops CLUB. 
• Vietnam provides an additional growth driver through BigC and GO Stores, where it is the omnichannel market leader, with Italy under Rinascente already ahead of pre-COVID sales levels.

• Delta in core net interest income growth is accelerating like no other peer
• Net interest margin’s are now up 50% YoY at a reasonable level of 3.02%
• Credit costs have yet to decline despite NPL ratio down sharply

• We have a positive view of Luxshare Precision Industry (002475 CH) and we believe its shares are well poised to outperform the market this year. 
• The recent production halts and protests at Foxconn’s Zhengzhou facility due to the overly stringent COVID measures has benefited Luxshare since Apple has given more orders to the company.
• We believe Luxshare will continue to grab more market share for producing iPhones and other products of Apple in 2023.

• Fanuc’s Q3 sales and earnings beat analyst expectations. Sales rose 17% YoY and profit increased by 14%. 
• The bears will be able to point to the collapse in FA orders in Q3, but this just confirms what the Japan Machine Tool numbers have been signalling.
• Robot orders remain strong as Fanuc continues to benefit from de-globalization and the need to modernize global supply chains.

• How many kitchens does Intel have? Intel guided 1Q2023 revenues to $11B, down 40% YoY / 22% QoQ and 21% (!!) below consensus $14B. 
• 1Q23 gross margins ex-accounting change guided to 36%, the lowest since 1986!
• Intel’s worsening FCF means dividend cuts are on the table.

• Bank Central Asia came through with a strong finish to the year as it took the brakes off lending, with the advantage of the highest CASA amongst Indonesian banks. 
• Loan growth was focused on corporate borrowers, commercial & SMEs, and consumers, with mortgages and autos seeing strong growth in 4Q2022, whilst loans-at-risk continues to decline, boosting profitability. 
• Bank Central Asia is highly capitalised but continues to invest in growth without sacrificing underwriting standards and continues to embrace its digital reach with growing numbers of customers. 

• Krung Thai is our pick; it ranks top in terms of post-provision profitability, as well as screening well on NPL coverage and valuations, including its low PEG ratio
• We also like Ayudhya, with its strong pre and post-provision profitability in 4Q22, strong credit quality metrics and attractive valuations
• Kasikorn has had a difficult 4Q22 due to its high cost of risk and its need to bolster provision coverage; Kasikorn may be a 2023 opportunity, but not yet

• Hogy Medical (3593 JP) reported 6.2% growth in revenue to ¥29.5B during 9MFY23, driven by healthy sales of Premium Kit and other non-woven products. Sales of Premium Kit climbed 12%.
• Rising cost pressure has negatively impacted margins. Gross profit margin contracted 180bps YoY to 40.6% in 9MFY23. Operating profit margin declined 20bps YoY to 17.1%.
• Hogy continued to expect revenue to rise 5.3% YoY to ¥38.7B, operating profit to grow 6.1% YoY to ¥6.5B, and net profit to increase 4.6% YoY to ¥4.57B in FY23.

• After combining the Norton LifeLock and Avast businesses, the company has been renamed as Gen Digital – a corporation with the goal to develop technological solutions that will allow users to profit fully from the online environment while maintaining their privacy and confidence.
• Today, the company’s brand portfolio includes well-known brands, including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender, and CCleaner.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• In December many NPL ratio categories improved MoM, but there are still some areas of concerns namely household and SME credit
• System loan growth for full year 2022 decelerated further (from an annualized 14.7% in November) but still grew by +14%, due primarily to slower consumer loan growth
• New credit spreads declined MoM, along with lending rates implying that this was not due solely to funding costs; we favour Banco do Brasil, and are cautious on Santander Brasil

• Tesla reported a 6% Q4 EPS beat, but stripping out a one-off deferred revenue booking & higher than expected regulatory credits, Q4 results missed by 9%.  
• Tesla rose +5.5% post market close after Musk said YTD orders are “2x” output. None of the data we have seen implies such demand, especially weekly China sales. 
• What went unnoticed on the earnings call is that Tesla created a $7bn credit facility this month, which should dash all hopes of them doing a share buyback in 2023. 

• ASML and Lam Research’s latest guidance implies extremely different near-term revenue outlooks but shows an industry pulling back near-term while investing for long-term.
• Results show the much weaker situation for Memory chips vs. Logic chips, and little discussion of a recovery for Memory from the firms so far.
• Firms servicing long-term strategic, specialized demand from customers are indeed performing better than those servicing more commoditized demand.

• Hyundai Motor’s EV sales as a percentage of total sales increased from 4.3% in 4Q 2021 to 5.7% in 4Q 2022. 
• Hyundai Motor announced that it will cancel 2.14 million common shares, representing 1% of its outstanding common shares.
• The company beat consensus sales and operating profit estimates in 4Q 2022 and the consensus is likely to revise up their earnings estimates. 

• Hindustan Unilever (HUVR IN)‘s strong quarterly performance was overshadowed by a proposed hike in royalty payments to parent Unilever PLC (ULVR LN) 
• HUVR’s historical royalty growth has been below revenue and PBT growth and hence does not generate any red flags in terms of minority shareholder protection.  
• While the impact on EPS is ~3%, we believe much of the reaction around HUVR’s Royalty is Noise. 

• S&P (the company) may be a lot more exposed than S&P (the index) if rates stay higher for longer and bets against the Fed unwind in 2H23.
• While we like the rating agency and financial data provider’s business portfolio, valuation is looking a bit stretched based on fundamental, relative and technical valuation metrics.
• We believe it is unlikely that the stock will push through the USD375/share resistance level in the near term, and would look for entry opportunities closer to USD325/share.

• Exxon Mobil Corporation is engaged in energy business. The Company’s principal business involves the exploration for, and production of, crude oil and natural gas, and the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a range of specialty products.
• The Company’s segments include Upstream, Downstream and Chemical.
• The Upstream segment is organized and operates to explore for and produce crude oil and natural gas.

• JR Takashimaya is a newbie in the world of department store retailing but has grown to become the fourth highest selling store in the two decades since it opened. 
• As a result, it is increasingly regarded by brands as the Nagoyan version of Isetan Shinjuku in Tokyo and Hankyu Umeda in Osaka.
• The store is an example of Takashimaya’s successful strategy to surround its key stores with more shopping facilities to suit all population segments, so driving traffic to the main store.

• We might get a reasonable amount of flak for this article, as many investors fear a recession, and concurrently are staying away from high-yield bonds.

• However, credit spreads are narrowing, and the equity market is receiving substantial support.

• Thus, we believe the time is right to “risk it” on cyclical, high-yield corporate bonds with favorable interest rate sensitivity.

• Three years ago, Itochu Corp made it clear it would be investing heavily in its brand business.
• It has been true to its word, adding the likes of Reebok, Under Armour and Forever 21 to its portfolio in the last year alone.
• It has now signed a deal with long-term Japan operator, L.L.Bean, while gearing up for a major relaunch of Eddie Bauer.

• The enterprise segment has fueled revenue growth at Ubiquiti (UI) and it should remain the same in the fiscal second quarter
• Ubiquiti has expanded its product offering for enterprise customers where it includes a complete solution down to the EV charging station
• We have made several adjustments to our earnings model. We continue to assume gross margin rising sequentially due to lower costs

• We don’t see a way for Sea Ltd (SE US)’s e-commerce business to turn profitable in the next few years.
• For the moment, the Digital-Entertainment segment is capable of absorbing most of e-commerce losses, but we are expecting the segment profitability to fall 70% to $135m per-quarter over the-next two-years.
• Once that happens, we think it will be game over for Sea Ltd.

• Bullish sentiments doubled BABA share price post 20th Party congress, as investors look beyond a soft December quarter and focus on re-opening prospects and flashing regulatory green lights.
• Expect single-Digit GMV growth, more disciplined OPEX and hence margin recovery to generate RMB180 billion non-GAAP net profit for BABA by FY25. Materializing fundamental recovery will support continued re-rating.
• That said, we also see headwinds to multiple expansion and expect 18-20x PER (among lowest in sector) for FY25, implying 21%/28% compounded annual return over FY23-25.

• CyberAgent Q1 loss on one-off expenses from World Cup streaming. We see Q1 as a bottom this fiscal year
• Share price already discounted weak FY9/23 guidance last October and focus is now on recovery 
• The World Cup was a success for the Japanese National side and for Abema

• In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 1Q 2023.
• Of the 33 pair trades, 2/3 of them involved holdcos outperforming opcos in the past year and 1/3 of them involved opcos outperforming holdcos in the same period.
• We highlight 33 pair trades that involve Korean holdcos and opcos.

• CyberAgent Inc (4751 JP) reported 1QFY09/2023 results. Revenue declined 2.1% YoY to JPY167.6bn (vs consensus JPY176.1bn) while OP turned negative JPY1.25bn (vs consensus OP of JPY4.1bn.
• CA’s largest investment to-date was for FIFA 2022 but top line growth has largely been in line with previous quarter. WAU have dropped to pre-FIFA levels.
• Though AbemaTV’s monetisation strategy seems to work, the growth prospects for other two segments are concerning and likely to drag down the consolidated performance.

• Nidec is headed into the red due to market disruption in China, restructuring charges and stagflation.
• The first two of these factors should be temporary, but the third points to longer term pressure on margins. Competition in EV motors is another problem that won’t go away.
• In a weak economy characterized by stagflation, it is too early to turn bullish.

• Bank Negara Indonesia finished 2022 with a strong set of numbers beating guidance and consensus, as it continued to benefit from low cost of funds and strong loan growth. 
• The bank has increased its exposure to higher-quality corporate customers, and large commercial customers in their supply chain plus growing government-backed KUR loans as well as consumer loans. 
• BNI’s strategy in digital banking for consumers and business customers is driving loan growth and fee income as well as funding. Valuations are attractive with rising returns increasing the appeal. 

• Krishna Institute of Medical Sciences (KIMS IN) is seeing a continued business recovery reflected in improving operating metrics. In Q2FY23, KIMS reported record high quarterly sales, EBITDA, and footfall.
• KIMS is following a disciplined growth strategy and plans to grow into markets that are adjacent to the current core markets of Andhra Pradesh and Telangana.   
• KIMS has set foot in a new market of Maharashtra, outside of its core market. With lower margins from acquired assets than matured hospitals, KIMS has scope for margin improvement.

• Banorte’s solid 4Q22, and the prospect of a healthy dividend payout, have so far trumped concerns of an earnings downturn from credit spread erosion, higher opex and cost of risk
• Bank sector data trends to November accentuate the return headwinds that we see emerging; further tightening credit spreads and a rising cost of credit, credit cards a likely leading indicator
• BBVA Mexico generates consistent premium ROE of 25%+, investors can gain exposure through BBVA equity; we continue to be cautious on Banorte, due to the growing risks to returns