Category

Equity Bottom-Up

Dec 26
0

Daily Brief Equity Bottom-Up: 2023 High Conviction | Polycab: A High Quality Play on Rise of India as a Manufacturing Hub and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • 2023 High Conviction | Polycab: A High Quality Play on Rise of India as a Manufacturing Hub
  • Software Service (3733 JP): High Order Book Indicates Continued Stellar Performance
  • Nanya Technology: Consensus Numbers Likely Too High, Net Loss Potential

2023 High Conviction | Polycab: A High Quality Play on Rise of India as a Manufacturing Hub

By Ankit Agrawal, CFA

  • Polycab is a high-quality wires/cables and FMEG brand, benefitting from growing domestic consumption and rising capex led by India gaining foothold in global manufacturing.
  • Its FMEG business is currently in nascent stage representing just 10-12% of revenues but is poised to scale up exponentially over the next 3 years.
  • Its Wires and Cables business, despite commanding a dominant 22%+ market share, has been gaining share and is benefitting from strong demand tailwinds, positioning it well for double-digit growth.

Software Service (3733 JP): High Order Book Indicates Continued Stellar Performance

By Tina Banerjee

  • Software Service (3733 JP) reported in-line FY22 results, with revenue growing 9% to ¥27.6B, driven by 7–8% y/y growth in hardware and software businesses, which contributed ~70% of revenue.
  • The company ended FY22 with an order backlog of ¥8.7B, up 22% y/y, driven by a 26% y/y growth in hardware orders. In November, the company secured order worth ¥2.6B.
  • For FY23, Software Service has guided for revenue of ¥30.4 billion (+10% y/y), operating profit of ¥5.4 billion (+12% y/y), and ordinary profit of ¥5.5 billion (12% y/y).

Nanya Technology: Consensus Numbers Likely Too High, Net Loss Potential

By Vincent Fernando, CFA

  • Micron’s recent results, where it showed a major margin slide and swung to a net loss, imply weak results ahead for Nanya Tech.
  • We believe that Nanya’s FY2023E consensus figures are likely to be revised down.
  • We see more downside risk ahead for Nanya Tech shares, and will await lower levels before buying based on deep-value.

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Dec 25
0

Daily Brief Equity Bottom-Up: Bloomberry Resorts: Flagging the Philippine Casino Market’s Fastest Recovery in All of Asia and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Bloomberry Resorts: Flagging the Philippine Casino Market’s Fastest Recovery in All of Asia
  • The TJX Companies Inc.: Initiation of Coverage – Recent Macro & Key Drivers
  • Constellation Brands Inc.: Initiation of Coverage – Financial Forecasts
  • CSX Corporation: Initiation of Coverage – Business Strategy & Other Drivers
  • Dollar General Corporation: Initiation of Coverage – Business Strategy & Key Drivers
  • Roblox Corporation: Initiation of Coverage – Business Strategy & Key Drivers
  • Take-Two Interactive Software Inc.: Initiation of Coverage – Adapting To An Evolving Business Environment & Key Drivers
  • Albemarle Corporation: Initiation of Coverage – Financial Forecasts
  • Veeva Systems Inc.: Initiation of Coverage – Product Offerings & Key Drivers
  • Cardinal Health Inc.: Initiation of Coverage – Positioning In An Oligopolistic Market & Key Drivers

Bloomberry Resorts: Flagging the Philippine Casino Market’s Fastest Recovery in All of Asia

By Howard J Klein

  • Last August 13th we urged investors to take a hard look at the spurt in the Philippine gaming market as soon as covid related shutdowns ended. Bloomberry traded at 7.1php.
  • We reiterated our bullish view this past November 13th at 9.7php.
  • Price at writing has fallen back to 7.50 indicates that conviction in the Philippine gaming recovery has not yet been recognized by investors in the space.

The TJX Companies Inc.: Initiation of Coverage – Recent Macro & Key Drivers

By Baptista Research

  • This is our first report on TJX Companies is pleased with its third-quarter performance.
  • The company once more produced solid profitability and a fantastic merchandise margin.
  • We initiate coverage on the stock of The TJX Companies with a ‘Hold’ rating.

Constellation Brands Inc.: Initiation of Coverage – Financial Forecasts

By Baptista Research

  • This is our first report on Constellation Brands, a dominant player in the international alcoholic beverage market, particularly the Mexican beer space.
  • The buy rate increased in the quarter for both total wine categories and high-end beer in tracked channels.
  • The beer business of the company remained well placed that continues to support the steady growth of the brands.

CSX Corporation: Initiation of Coverage – Business Strategy & Other Drivers

By Baptista Research

  • This is our first report on CSX, one of the largest providers of rail-based freight transportation services in the United States.
  • Their competitive advantages should encourage more CSX rail shipping from their clients, but they still need to concentrate on making this happen.
  • We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

Dollar General Corporation: Initiation of Coverage – Business Strategy & Key Drivers

By Baptista Research

  • This is our first report on major discount retailer, Dollar General Corporation.
  • Its revenue growth was led by comp sales growth and in market share of both consumable and non-consumable product sales.
  • Dollar General, during the quarter, experienced significantly higher cost pressures.

Roblox Corporation: Initiation of Coverage – Business Strategy & Key Drivers

By Baptista Research

  • This is our first report on Roblox, one of the most popular online entertainment and gaming platforms in the U.S. that is gradually spreading its wings across the world.
  • Their DAUs were 58.8 million in Q3 on a DAU basis, a 24% growth from the same quarter last year.
  • It is a fact that Roblox continues to face challenging comparisons especially with the last year and the pandemic times.

Take-Two Interactive Software Inc.: Initiation of Coverage – Adapting To An Evolving Business Environment & Key Drivers

By Baptista Research

  • This is our first report on Take-Two Interactive Software, a well-known developer, publisher, and marketer of games and interactive entertainment for consumers across the globe.
  • The company delivered a disappointing result in the past quarter failing to meet Wall Street expectations in terms of revenues as well as earnings.
  • We initiate coverage on the stock of Take-Two Interactive Software with a ‘Buy’ rating.

Albemarle Corporation: Initiation of Coverage – Financial Forecasts

By Baptista Research

  • This is our first report on Albemarle Corporation, one of the largest producers of lithium, bromine, and other related specialty chemicals across the globe.
  • The strong performance for its lithium segment was driven by higher volumes and higher realized pricing.
  • Albemarle is realigning its core bromine and lithium businesses to energy specialties and storage and expects it to be effective next month.

Veeva Systems Inc.: Initiation of Coverage – Product Offerings & Key Drivers

By Baptista Research

  • This is our first report on Veeva Systems, one of the well-known providers of cloud-based software solutions for the global life sciences industry.
  • The fact remains that bulk of the revenue of Veeva is on the application of Veeva Vault.
  • We initiate coverage on the stock of Veeva Systems with a ‘Hold’ rating.

Cardinal Health Inc.: Initiation of Coverage – Positioning In An Oligopolistic Market & Key Drivers

By Baptista Research

  • This is our first report on Cardinal Health, one of the largest wholesalers within the healthcare domain in the U.S.
  • The company delivered a mixed result in the last quarter surpassing revenue expectations of Wall Street but missing out on earnings.
  • Cardinal delivered higher than its expectations in its Pharma segment despite managing industry-wide inflationary headwinds.

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Dec 24
0

Daily Brief Equity Bottom-Up: Trading Sea Ltd in 2023: It Is Still The Same Beast and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Trading Sea Ltd in 2023: It Is Still The Same Beast
  • Telekomunikasi Indonesia (TLKM IJ) – Increasingly Digital
  • Micron’s FQ1 23 Earnings. Yikes!
  • Binance: Waiting For The Other Shoe To Drop
  • The S&P 500 Has Further Lows Ahead In 2023

Trading Sea Ltd in 2023: It Is Still The Same Beast

By Oshadhi Kumarasiri

  • Trading Sea Ltd (SE US) shares this year may not be as straightforward as the previous year.
  • With the share price at pre-COVID levels, swing highs could be difficult to swallow for those of us who would like to remain short Sea Ltd in 2023.
  • Nonetheless, we would be short Sea-Ltd at the turn of the year as we think valuation multiples could fall to a new all-time low with all segments facing stiff challenges.

Telekomunikasi Indonesia (TLKM IJ) – Increasingly Digital

By Angus Mackintosh

  • Telekomunikasi Indonesia (TLKM IJ) produced what looked like a decent set of 9M2022 numbers as it seeks out its future digital reincarnation. 
  • Data continues to dominate revenues, making up 81% of Telkomsel revenue, with Indihome becoming increasingly important at nearly 20% of total revenue, with data centres set to become increasingly important.
  • The recent sell-off looks more to do with year-end liquidity flows than fundamentals with valuations looking increasingly attractive. 

Micron’s FQ1 23 Earnings. Yikes!

By Semicon Alpha

  • Micron yesterday announced FQ1 revenues of $4.1 billion, , down 39% sequentially and down 47% year over year.
  • This was still within the forecasted range, albeit at the very low end of the scale.
  • Gross margin came in at 22.9%, down approximately 17 percentage points sequentially, primarily due to lower pricing.

Binance: Waiting For The Other Shoe To Drop

By Kevin George

  • A DOJ investigation adds further negative sentiment to the ‘black box’ of the finance exchange.
  • The DOJ investigation is being investigated by the Department of Justice, which is under investigation into the exchange exchange exchange between banks and banks.
  • The investigation is expected to conclude in the coming weeks. The investigation will be conducted by the Justice Department.

The S&P 500 Has Further Lows Ahead In 2023

By Kevin George

  • China is the real pivot that could drive stocks, say investors.
  • China’s economic growth could be a real pivot for stocks, they say.
  • China’s economy is a key factor in the growth of the country’s economy, according to analysts.

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Dec 23
0

Daily Brief Equity Bottom-Up: Mahindra & Mahindra (MM IN) | Scorpio-N Fake Bookings and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Mahindra & Mahindra (MM IN) | Scorpio-N Fake Bookings
  • Breaking Estimates Short Candidates: Kulicke & Soffa, Kronos, Marvell Tech, Montauk Renewables
  • Vertex Pharmaceuticals (VRTX US): A High-Quality Deep Pocket Biotech Must-Have for Every Investor
  • Taiwan Tech Weekly: Micron Earnings Miss Implies Margin Downside, Hon Hai Moving 30% Apple Business
  • Delta Taiwan Vs. Thailand Monitor: Delta Thai Joining SET50, Could Open Up Rare Rel Valuation Level
  • Micron Fiscal Q1: Short-Term Pain For Long-Term Gain
  • Splunk Is A Rare Tech Growth Opportunity For 2023

Mahindra & Mahindra (MM IN) | Scorpio-N Fake Bookings

By Pranav Bhavsar

  • One of our routine channels is suggesting the possibility of some of Mahindra & Mahindra (MM IN) ‘s Scorpio-N bookings being fake.
  • This channel (an online auto forum) has been a trusted source of information followed by various industry veterans including the company’s chairman.
  • While the rationalisation of fake bookings as a recent industry practice could solace some, the fallacy of the bookings narrative only gets stronger. 

Breaking Estimates Short Candidates: Kulicke & Soffa, Kronos, Marvell Tech, Montauk Renewables

By Eric Fernandez, CFA

  • This model finds companies facing recent sharp cuts in estimates. These shorts can have very disparate characteristics.
  • The key judgement involves whether the negative revisions are temporary or if they are indications of ongoing weakness in the business. 
  • Breaking Estimates stocks often continue to decline after the cuts.  This week we flag:  Kulicke & Soffa, Kronos, Marvell Tech, Montauk Renewables

Vertex Pharmaceuticals (VRTX US): A High-Quality Deep Pocket Biotech Must-Have for Every Investor

By Tina Banerjee

  • Vertex Pharmaceuticals (VRTX US), the global leader in cystic fibrosis treatment, has a broad and deep clinical pipeline across multiple modalities. Each of its clinical programs represents a multibillion-dollar opportunity.  
  • MRNA drug candidate for treating the remaining 5,000 CF patients who cannot benefit from existing therapies, is set to enter clinic. Drug candidate for acute pain is in late-stage trial.
  • Regulatory submission for exa-cel for sickle cell disease and transfusion-dependent beta thalassemia in U.S., EU and UK are expected to be completed by 1Q23.

Taiwan Tech Weekly: Micron Earnings Miss Implies Margin Downside, Hon Hai Moving 30% Apple Business

By Vincent Fernando, CFA

  • Micron released its latest results, missing expectations and implying more near-term pain for the memory chip space.
  • Hon Hai could shift 30% of its production for Apple outside of China according to an industry report.
  • Intel delays German expansion citing cost inflation, seeking additional government subsidies.

Delta Taiwan Vs. Thailand Monitor: Delta Thai Joining SET50, Could Open Up Rare Rel Valuation Level

By Vincent Fernando, CFA

  • Delta Thailand will be joining the Thailand SET50 Index, as was predicted by Brian Freitas here on Smartkarma.
  • The “Illogical” valuation is back — Delta Taiwan trades as a smaller company despite being a substantially larger franchise.
  • Opportunity — Index-Related buying of Delta Thailand could open up one of the most historically extreme relative valuations for Delta Taiwan.

Micron Fiscal Q1: Short-Term Pain For Long-Term Gain

By Kevin George

  • Micron Technology, Inc. reported fiscal Q1 2023 earnings and announced cost-cutting measures.
  • Macroeconomic trends are still a drag, according to the company.
  • The company also announced cost cutting measures for the next year’s fiscal year.

Splunk Is A Rare Tech Growth Opportunity For 2023

By Kevin George

  • Splunk is stronger with Q3 earnings and guidance. The company is shadowed by takeover talk.
  • The company has a strong cloud market make it a buy. The firm is shadowing by takeover talks.
  • The firm has been in the news for more than two years.

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Dec 22
0

Daily Brief Equity Bottom-Up: Toshiba (6502 JP): Sanctions on YMTC Help Kioxia and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Toshiba (6502 JP): Sanctions on YMTC Help Kioxia
  • Xiaomi: Massive Layoffs to Rescue Falling Margins
  • Ryohin Keikaku: Beat On The Cards, Big Moves To Follow
  • Grab (GRAB IJ) – Moving Forward on a Number of Fronts
  • JD Health (6618.HK) – Some Positive Updates in Business
  • LyondellBasell: Looking For Safety And High Dividends In 2023

Toshiba (6502 JP): Sanctions on YMTC Help Kioxia

By Scott Foster

  • The U.S. government put YMTC on its Entity List in early December, effectively cutting it off from U.S. semiconductor equipment companies and other U.S. technology.
  • YMTC’s Xtacking architecture was good enough for Apple, but it will now have trouble maintaining its 5% market share, let alone ramping up production of its new 232-layer device.
  • This will take some of the competitive pressure off Kioxia and benefit Toshiba, which owns 41% of its shares.

Xiaomi: Massive Layoffs to Rescue Falling Margins

By Shifara Samsudeen, ACMA, CGMA

  • Several news media outlets reported that Xiaomi Corp (1810 HK) has started laying off about 10-15% of its employees across several units of its smartphone and internet services businesses.
  • Xiaomi’s margins have come under pressure with entering into the premium smartphones segment which has resulted in aggressive expansion of offline stores.
  • The company’s 3Q2022 revenues declined 9.7% YoY as a result of decrease in revenue from all three business segments while margins further dropped compared to 3Q2021.

Ryohin Keikaku: Beat On The Cards, Big Moves To Follow

By Oshadhi Kumarasiri

  • Ryohin Keikaku (7453 JP) rose 24% following an earnings beat in the previous quarter. However, the share price progression afterwards was less than we anticipated.
  • Our analysis points to one more big earnings beat as consensus is still conservative on cost assumptions.
  • We think Ryohin Keikaku could take another big stride towards our target price following 1QFY23 results, due on the first week of January 2023.

Grab (GRAB IJ) – Moving Forward on a Number of Fronts

By Angus Mackintosh

  • Our recent update with Grab (GRAB US) management revealed a number of interesting product-led initiatives that will drive future growth and customer retention as well as save on costs. 
  • Grab (GRAB US) has already seen significant progress on Grab Unlimited given its link to promos plus it is focusing on higher-spending customers to reduce the need for subsidies.
  • The company’s valuations look attractive relative to growth and considering it is moving more quickly towards profitability plus it has more than ample cash to make it there.

JD Health (6618.HK) – Some Positive Updates in Business

By Xinyao (Criss) Wang

  • JD Health (6618 HK) is on the right track in terms of business model and investment logic. The Company has also begun to enter a virtuous circle in financial performance.
  • There were some positive business updates in term of To B business in 22Q1-Q3, which would bring JD Health closer to establishing a complete “retail pharmacy + healthcare service” ecosystem.
  • For trading strategy, at present, considering the complex external environment, we recommend investors to do short-term trade, rather than long-term hold.

LyondellBasell: Looking For Safety And High Dividends In 2023

By Vladimir Dimitrov, CFA

  • LyondellBasell has become a business worth considering for anyone looking for relatively safe and high dividend yield in 2023.
  • Lower margins in key segments are largely priced-in as management prepares to reduce capacity.
  • Strong cash flow positioning and recent deleveraging efforts have significantly reduced risks related to future dividend payouts.

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Dec 21
0

Daily Brief Equity Bottom-Up: China Catering Sector: In Search of Alpha and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • China Catering Sector: In Search of Alpha
  • India Channel Insight #46 | Bata India, Campus Activewear
  • TMT Left for Dead Long Ideas: Adobe
  • TMT Left for Dead Long Ideas: Match
  • Netflix AVOD Not Chill
  • ClouDr Group (9955.HK) – Positive Profit Alert for 2022, Thoughts on Business Model and the Concerns
  • Korea Biotech & Healthcare: A Pair Trade Between Hanmi Science and Hanmi Pharm

China Catering Sector: In Search of Alpha

By Eric Chen

  • Sentiment driven rally is fading. Although COVID exit remains swing factor, individual company’s performance will increasingly be driven by their business models.
  • Our proprietary store expansion framework suggests divergent growth outlook for major players – stretched for Haidilao, moderate for Jiumaojiu and Yum China, and ample for Xiabuxiabu.
  • Xiabuxiabu is our top pick due to its strong turnaround not yet priced in depressed valuation. We also like Yum China but stay cautious on Jiumaojiu and Haidilao on valuation.     

India Channel Insight #46 | Bata India, Campus Activewear

By Pranav Bhavsar

  • Consumer sentiment is soft, but competition is limited for both Bata India Ltd (BATA IN) and Campus Activewear (CAMPUS IN) 
  • Bata enjoys good relationships with its distributors and franchisees, traction for offline sales channels is strong.
  • Campus is in an aggressive expansion mode, with leadership in the sports shoe segment driving sales.

TMT Left for Dead Long Ideas: Adobe

By Aaron Gabin

  • Adobe is down 42% in 2022, and down 22% relative to the S&P. 
  • Valuation has been cut in half, and investors have voiced concerns and skepticism about its (incredibly) expensive acquisition of Figma in September.
  • Adobe remains better positioned than most large cap software peers as it maintained its guidance from October Analyst Day, highlighting the secular tide behind digital transformation efforts remains strong. 

TMT Left for Dead Long Ideas: Match

By Aaron Gabin

  • Match is down 70% in 2022, and down 50% relative to the S&P. 
  • Despite impressive new CEO and a self help story, shares have continued to underperform rival Bumble and the market by wide margin on macro concerns.
  • 13x Forward EBITDA for a company forecast to grow EBITDA at a 16% CAGR through 2025 (we think closer to 20%), has 35% EBITDA margins and $1B in annual FCF

Netflix AVOD Not Chill

By Aaron Gabin

  • Multiple negative data points have come out reflecting limited initial uptake for Netflix’s ad-based tier.
  • (We think) Netflix lack of AVOD uptake is due to it being fully saturated in its major markets wheras competing services starting from scratch have higher AVOD uptake.
  • Lack of incremental subs from AVOD points towards a weaker than expected 4Q22 and downside to guidance…not good for a stock that has ripped since 2Q22 earnings.

ClouDr Group (9955.HK) – Positive Profit Alert for 2022, Thoughts on Business Model and the Concerns

By Xinyao (Criss) Wang

  • ClouDr released positive profit alert for 2022. We think ClouDr is in a virtuous circle based on its solid business model. It’s a matter of time before ClouDr achieves breakeven. 
  • As the number of hospitals/pharmacies newly deploying SaaS modules increases, and the existing B-end users continue to receive new patients,ClouDr is able to absorb new C-end users at low cost.
  • When more powerful competitors come in and carve up B-end market, ClouDr’s long-term prospects may be uncertain, but its valuation shouldn’t be much lower than Ping An Good Doctor. 

Korea Biotech & Healthcare: A Pair Trade Between Hanmi Science and Hanmi Pharm

By Douglas Kim

  • In this insight, we discuss a pair trade between Hanmi Science (long) and Hanmi Pharm (short). There are three major reasons we like this pair trade.
  • First, the gap between these two stocks have widened too much in the past year. Second, Hanmi Science may pay higher cash dividends due to inheritance tax issue. 
  • Third, Hanmi Pharm’s valuations remain lofty and Hanmi Science’s valuation discount relative to its historical valuation has become more compelling. 

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Dec 20
0

Daily Brief Equity Bottom-Up: 2022 High Conviction Recruit: More Room for Shares to Fall and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • 2022 High Conviction Recruit: More Room for Shares to Fall
  • Oriental Land: Fantasy Springs, No Longer Enticing Investors, It’s Likely The Start Of The Breakdown
  • Softbank Group – Requiem for WeWork’s Premium Valuation
  • China Internet Weekly (19Dec2022): Trip.com, Kuaishou, IQiyi, Activision Blizzard
  • Dream Incubator (4310 JP) – An Interesting Exit and Attractive Valuation for Future Growth
  • Bukalapak (BUKA IJ) – Opportunity from Adversity
  • Cambricon Technologies: Trade Blacklist by the US Govt Likely to Have Long-Term Negative Impact
  • Sizable Beat: Sumo Logic Reported Better Than Expected 3QFY23 Results
  • Building in The Big Leagues

2022 High Conviction Recruit: More Room for Shares to Fall

By Shifara Samsudeen, ACMA, CGMA

  • It is time we review our 2022 high conviction call. Our conviction short Recruit has fallen 41.5% since we made our call on the stock on 01st December 2022.
  • Though Staffing and Matching & Solutions businesses have bounced back post-Covid, HR Tech biz’s earnings have started to fall with weakening of labour markets.
  • With global recruitment markets facing challenges with weakening of global economies, we think Recruit Holdings (6098 JP) ‘s shares have further room to fall in 2023E.

Oriental Land: Fantasy Springs, No Longer Enticing Investors, It’s Likely The Start Of The Breakdown

By Oshadhi Kumarasiri

  • As earnings recovered following the COVID drop, Oriental Land (4661 JP)’s FY+2 EV/OP returned to around 40-60x range, which in our opinion is too expensive, especially in current market conditions.
  • The positivity surrounding the opening of Fantasy Springs got investors to pay huge multiples but Fantasy Springs is no longer looking enticing to investors.
  • With a miss and a downgrade to FY23 guidance on the horizon, we are expecting OLC’s share-price to break the long-term trend to the downside in the next few months.

Softbank Group – Requiem for WeWork’s Premium Valuation

By Kirk Boodry

  • The market cap of Vision Fund portfolio company The We Company (WeWork) (WE US) has fallen decisively below that of rival IWG PLC (IWG LN) for the first time
  • Still despite WeWork’s constant drag on portfolio returns including c. $500mn this quarter, Vision Fund remains on track to end the quarter in the black (+$2bn QTD)
  • The holding company discount appears to have stabilized at 35% but this seems a bit steep with markets volatile again and a move to 40% would not surprise

China Internet Weekly (19Dec2022): Trip.com, Kuaishou, IQiyi, Activision Blizzard

By Ming Lu

  • Trip.com’s revenue increased by 29% YoY and adjusted EBITDA increased 164% YoY in 3Q22.
  • Kuaishou announced that the views of short play increased by 40% in 2022.
  • Activision Blizzard announced that they are looking for a new agency in China.

Dream Incubator (4310 JP) – An Interesting Exit and Attractive Valuation for Future Growth

By Travis Lundy

  • In early November, Dai Ichi Life Insurance (8750 JP) announced it would buy ipet Holdings (7339 JP), of which listed VC/PE/incubator Dream Incubator (4310 JP) owned 55%. DI agreed. 
  • Dream Incubator’s exit is worth ¥21.54bn in cash and ¥18.2bn in extraordinary gains on the consolidated financial statements for March 2023. 
  • That is nice. They have promised to deliver ¥10bn of proceeds to shareholders and reinvest the other ¥5bn to grow their consulting business. It’s a nice little asset.

Bukalapak (BUKA IJ) – Opportunity from Adversity

By Angus Mackintosh

  • The ironically named warung-tech segment in Indonesia has seen a recent spate of layoffs by a number of key players, as the path to profitability becomes the key focus. 
  • One company that stands out as a potential beneficiary is Bukalapak, which is already the dominant player in this space through its Mitra business, especially outside Tier 1 cities. 
  • Bukalapak saw some dramatic improvements in both take rates and contribution margins in 3Q2022, with more to come in 4Q2022 and beyond, from both its Mitra and Specialty store segments.

Cambricon Technologies: Trade Blacklist by the US Govt Likely to Have Long-Term Negative Impact

By Douglas Kim

  • It was recently announced that US government put 36 Chinese companies including Cambricon Technologies on its trade blacklist that can restrict the semiconductor maker’s access to US technologies and products.
  • The US government has determined that Cambricon Technologies and these other Chinese companies pose risk to the US national security.
  • We believe that Cambricon Technologies being included in the trade blacklist by the US government is likely to have a long-term negative impact on the company.

Sizable Beat: Sumo Logic Reported Better Than Expected 3QFY23 Results

By Andrei Zakharov

  • We maintain a bullish view on Sumo Logic Inc (SUMO US)  after the company reported stronger than expected 3QFY23 revenues and management updated its financial guidance for FY23. 
  • We were impressed with subscription revenue growth, strong gross margins, and lower-than-expected operating loss. Sumo Logic Inc (SUMO US)  increased FY23 revenue guidance to $298M-$299M.
  • Our estimates suggest the company will cross the $300M ARR mark in 2022 and the stock currently trades at a discount to the 20%+ growth peer group.

Building in The Big Leagues

By subSPAC

  • A perfect storm of inflation, aggressive monetary tightening, and recessionary fears in 2022 has rocked the Housing market.
  • This is especially true for home builders like Landsea Homes, which went public through a SPAC last year.
  • While not a household name, Landsea has firmly established itself as an affordable builder for first-time home buyers.

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Dec 19
0

Daily Brief Equity Bottom-Up: Buy China Education Group on China Private Higher Education Sector Recovery and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Buy China Education Group on China Private Higher Education Sector Recovery

Buy China Education Group on China Private Higher Education Sector Recovery

By Xin Yu, CFA

  • China private higher education sector is recovering with the supportive government policy
  • The sector trades at single digit P/E, which is attractive
  • China Education Group with its largest scale and solid trade record is a good candidate for investment

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Dec 18
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Daily Brief Equity Bottom-Up: Zozo Opens Store in Omotesando and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Zozo Opens Store in Omotesando, to Increase Retail Ties
  • AstraZeneca ADR: Initiation of Coverage – Recent Approvals & Other Drivers
  • Illumina Inc.: Initiation of Coverage – New Launches & Other Drivers
  • Las Vegas Sands Corp.: Initiation of Coverage – Business Strategy & Key Drivers
  • MGM Resorts International: Initiation of Coverage – Business Strategy & Key Drivers
  • Trex Company Inc.: Initiation of Coverage – Financial Forecasts

Zozo Opens Store in Omotesando, to Increase Retail Ties

By Michael Causton

  • Zozo may be the leading online fashion mall but it has spent the last two years using its power to drive more traffic to its merchants’ physical stores. 
  • Its latest service allows stores to sell stock held at Zozo’s fulfilment centre when they themselves have sold out and thus avoid lost sales opportunities.
  • Zozo itself, meanwhile, will open a physical store in Omotesando but one entirely devoted to styling services for its customers.

AstraZeneca ADR: Initiation of Coverage – Recent Approvals & Other Drivers

By Baptista Research

  • This is our first report on global pharma major, AstraZeneca.
  • The company delivered an outstanding set of results, with revenues of nearly $11 billion surpassing Wall Street expectations.
  • Overall, AstraZeneca is well-positioned to gain significant revenue in the coming quarters.

Illumina Inc.: Initiation of Coverage – New Launches & Other Drivers

By Baptista Research

  • This is our first report on Illumina, a well-known provider of sequencing and array-based solutions for genetic and genomic analysis.
  • In the quarter, Illumina saw fantastic customer response to the recently launched NovaSeq X Series.
  • Driven by genetic disease testing and oncology testing, there was an increase in clinical sequencing consumable shipments.

Las Vegas Sands Corp.: Initiation of Coverage – Business Strategy & Key Drivers

By Baptista Research

  • This is our first report on Las Vegas Sands Corp, one of the largest operators of global resorts with integrated casinos, gaming, entertainment, and various amenities.
  • The company has undergone a challenging period during and after the pandemic as travel restrictions continued to impact the financial results.
  • We initiate coverage on the stock of Las Vegas Sands with a ‘Hold’ rating.

MGM Resorts International: Initiation of Coverage – Business Strategy & Key Drivers

By Baptista Research

  • This is our first report on MGM, one of the largest owners and operators of casinos, hotels, and entertainment resorts in the world.
  • The company reported a mixed quarterly result, surpassing Wall Street expectations in terms of revenues but reporting wider than expected losses.
  • Cosmopolitan Las Vegas continued to surpass the company’s early projections while operating under MGM Resorts’ direction and had one of its finest quarters.

Trex Company Inc.: Initiation of Coverage – Financial Forecasts

By Baptista Research

  • This is our first report on Trex, one of the largest manufacturers of high-performance, wood-alternative railing and decking, as well as a leader in eco-friendly, low-maintenance living products in the world.
  • The launch of the new Trex Transcend lineage product line of the company has been received favorably in the market.
  • In this quarter, Trex partnered with two more distribution locations in Texas, which enabled it to expand and service the availability of the products of Trex Outdoor Living in the fastest-growing markets.

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Dec 17
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Daily Brief Equity Bottom-Up: Xinyi Glass (868): Efficient Way to Ride Chinese Property Market Revival and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Xinyi Glass (868): Efficient Way to Ride Chinese Property Market Revival
  • Nitori to Ramp up N+ Clothing Chain – ¥500 Billion in New Sales?

Xinyi Glass (868): Efficient Way to Ride Chinese Property Market Revival

By Henry Soediarko

  • The Chinese property market is undergoing a revival story initiated by the government.
  • Xinyi Glass Holdings (868 HK) main product is a key component for real estate developers.
  • Xinyi Glass has a much cleaner balance sheet compared to the property developers. 

Nitori to Ramp up N+ Clothing Chain – ¥500 Billion in New Sales?

By Michael Causton

  • Nitori dominates in home decor and furniture but now wants to become a top 10 fashion retailer through its N+ chain targeting older women. 
  • It will raise the rate of new stores to 30 a year and then to up to 100 a year as it reaches scale. 
  • Will it be the Uniqlo for the middle-aged? If so it could own a chunk of a segment worth an estimated ¥2.5 trillion.

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