Equity Bottom-Up

• The last leg of Sea Ltd (SE US)’s original bull thesis is about to break with Shopee’s revenue expected to start declining from 3Q22 onwards.
• However, a lower-than-expected operating loss, driven by cost-cutting could get the bulls excited for a short while following the 3Q22 results due later this week.
• With the business remaining unprofitable after cost-cutting, we think 3Q22 results could be another opportunity to profit on the short-side as the FV of Sea could be around $10bn EV.

• Chinese government outlined 16 steps to support the property industry on Nov 11
• The newly released measures clearly show that the government has reversed its attitude toward property industry, which may trigger the end of the downcycle.
• During the property sector rebound, Country Garden Services (CGS) can be a good investment. The company has a solid track record and shows attractive valuation.

• Tokyo Electron (TEL) has cut sales guidance for 2H of FY Mar-23 by more than 25% and operating profit guidance by more than 50%. 
• Half of the reduction in sales guidance is due U.S. sanctions on China. Management does not expect demand to pick up until the second half of next year. 
• The share price has risen by more than 30% in the past five weeks after a slight decline in U.S. inflation. Projected valuations are not particularly attractive.

• Suzuken Co Ltd (9987 JP) last Friday announced earnings which beat expectations and raised forecasts well above consensus. But Implied H2 did not change, suggesting full-year is lowballed.
• The company announced a buyback over 5 months, but today (Tuesday) announced a ToSTNeT-3 buyback for the full size (6% or so) that morning. 
• It looks like insider selling, which in addition to being accretive would be bullish on a governance basis.

• Palantir delivered a mixed set of results in the last quarter.
• Its $478 million in revenue surpassed Wall Street expectations but the company missed out on the earnings expectations of analysts.
• U.S. commercial business expanded for the ninth consecutive quarter, up 53% yearly.

• China’s ambition to build into a strong manufacturing country as revealed in 20th Party Congress should place Dongfang Electric (1072 HK) and CIMC Enric Holdings (3899 HK) in excellent positions.
• The leadership in power and new energy equipment industry, improving gross margin outlook, well-covered order book and undemanding multiples are the key merits of Dongfang Electric (1072 HK). 
• CIMC Enric Holdings (3899 HK)‘s good presence in clean energy, chemical/environmental and liquid food segments, global product competitiveness, secured order backlog and net cash position are its major edges. 

• Apollo Hospitals Enterprise (APHS IN) recorded 14% y/y growth in revenue in Q2FY23. Occupancy in both the mature as well as new hospitals improved in Q2FY23 compared to prior quarter.
• Q2FY23 reported EBITDA declined 8% y/y to INR5.65 billion due to impact of 24/7 operating costs, which stood at INR1.74 billion (vs INR475 million in Q2FY22).
• In October, Apollo Hospitals entered into a definitive agreement to acquire 60% stake in Kerala First Health Services Limited, which offers Ayurveda medical services under the “AyurVAID Hospitals” brand.

• Block delivered a decent set of results with an all-around beat and good profitability during the last quarter.
• Its BNPL platform produced $150 million in gross profit in the third quarter, distributed between Square and Cash App.
• Inflows per active user have been improving in the third quarter compared to the first and second quarters and stable year over year.

• Like most technology stocks, Datadog has also taken a massive beating in terms of its share price but its financial performance has been good.
• The company reported strong results for the third quarter and managed an all-around beat.
• Since customers continue to manage their companies with greater cost consciousness, the company observed current customer usage growth at similar levels as Q2.

• In Q2FY23, Thermax (TMX IN) recorded strong revenue growth of 41% y/y to Rs20.8bn, driven by strong growth across all the three segments.
• The company bore the brunt of high raw material prices as EBIT margins saw a 900 bps decline y/y to 6.9%. However, EBIT margin improved 200 bps over Q1FY23.
• The order book of the company grew 46% y/y to Rs94.8bn. Order book is well diversified across sectors. Domestic orders comprised ~84% of the order book.  

• Headline 2QFY22 results for Softbank Group were in the black, largely due to the Alibaba stake sale, but the group’s three funds registered an aggregate USD10bn of valuation losses
• FTX’s write-down to zero will cost Softbank’s Vision Fund 2 USD100m in 3Q22, our main concern is what the VC funding downturn means for portfolio valuations in the coming quarter
• The group’s NAV discount has now tightened meaningfully; we believe that this makes it less advantageous for management to announce another share buy-back programme

• Recruit Holdings (6098 JP) reported 2QFY03/2023 earnings today. Revenue increased 25.3% YoY to JPY878.4bn (vs consensus JPY842.7bn) while EBIT decreased 8.2% YoY to JPY108.5bn (vs consensus JPY116.1bn).
• HR Tech’s top line growth further slowed down to 40.2% YoY while adjusted EBITDA margin of the segment declined to 30.4% from 40.6% in the same period a year ago.
• The company’s 2QFY03/2023 earnings were better than we expected, however, it shows that the earnings growth is slowing down with weakening of labour markets globally.

In the upcoming webinar, Harmeet Bedi, Deputy CEO and CFO of PRIME US REIT, will share a short company presentation. After which, he will engage in a fireside chat with Smartkarma Insight Provider, Sumeet Singh. The Corporate Webinar will include a live Q&A session.

The webinar will be hosted on Tuesday, 29 November 2022, 17:00 SGT/HKT.

• NetEase and Activision Blizzard will possibly terminate their cooperation next January.
• Singles’ Day sales were not very successful for e-commerce apps such as Alibaba and JD.com.
• IQiyi announced a revenue share rule to short TV series producers, including cost per mille and membership fee.

• Machine Tool Orders in Japan decreased to 141 billion yen in October from 149 billion yen a year ago.
• The 5.4% decline marks the start of the third downturn in Machine Tool Orders over the past decade. 
• We analyse those downturns and believe that Fanuc’s stock price has probably hit bottom, but THIS TIME IS DIFFERENT

• Bloomberg reported on Friday that GoTo (GOTO IJ) is planning to cut more than 1k jobs across all its divisions to cutdown its costs and improve its financials.
• Though GoTo’s top line has continued to expand, the company continues to burn cash and the losses have further widened during the recent quarters.
• GoTo’s shares rose 11.7% during Friday’s trade, however, share price is still down by about 45%  from the company’s IPO price.

• With e-commerce and fintech segments performing reasonably well, Rakuten Inc (4755 JP)’s Q3 results were mostly in line with expectations.
• However, the Mobile segment failed to live up to expectations with the segment’s operating loss narrowing by just ¥3.4bn to ¥120.9bn in 3Q22.
• Nonetheless, we are excited about the prospects of Rakuten Mobile through the success of Rakuten Symphony as the business is close to signing 12 new corporate customers.

• Early this year I was quite pessimistic on Hong Kong stocks.
• But since then the Hang Seng is down another 20% or so. A lot of stocks with 9-10%+ dividend yields are laying around.
• I should have been a bit quicker writing this up, but then you are getting it for free.

• In this insight, we discuss a pair trade between NCSOFT Corp (036570 KS) (go long) and Netmarble Corporation (251270 KS) (go short).
• NCSoft is currently trading at lower valuation multiples (in terms of EV/EBITDA and P/E) than Netmarble, which we believe is not justified.
• One of the key risk factors of Netmarble is that it could be excluded from the MSCI Korea Index in 2023/2024.

• Jiangsu Expressway (H) (177 HK) has seen marginally weaker traffic in 4Q22 relative to 3Q22 due to sporadic COVID outbreaks but the magnitude is manageable. 
• We welcome its indication that stable absolute DPS level will be maintained, with additional target to increase gradually. That means secured FY22 and FY23 yield of at least 8.3%.
• Clean energy investment and exit of property business will improve earnings quality. Projected ROE of over 13% also provides good justification for upside to its 0.8x P/B. 

• Prodia (PRDA IJ) is a stand out amongst Indonesia’s healthcare players given it is the only company in Indonesia with accreditation from the College of American Pathologists. 
• 3Q2022 reflected a normalisation of the testing business towards routine testing but at higher levels, and with a greater variety of tests with more advanced levels of digitalisation. 
• Prodia (PRDA IJ) stands out in terms of its strong market positioning and track record together with attractive valuations, especially versus Indian peers in the diagnostic space.

• While Macau remains hostage to Beijing’s zero tolerance covid policy, Philippine gaming has taken the lead in ASEAN recovery ramp.
• The Soliare property at manila has outperformed expectations on the basis of pent up demand beginning to show in domestic player revenue. 
• CEO Razon has confirmed continuing expansion plans at Cebu and Emerald Bay to be completed before the end of 2023. Both will be accretive to group EBITDA.

• No substantive progress is achieved on Brilliance Group’s bankruptcy restructuring so far.
• Besides estimated max Rmb6 per share, or HKD6.5 per share special dividend 2022E, shareholders may get more cash dividends in the next few years
• Our enterprise value analysis shows Brilliance China’s fair value could be as high as HHD21.9 per share, including estimated HKD6.5 per share special dividend 2022E.

• Ansys delivered a positive quarterly result with a strong performance on most key metrics, including revenues, earnings per share, operating margins, and ACV.
• Semiconductor and high-tech, automotive and ground transportation, and aerospace and defense were again the largest contributors in this quarter.
• The startup program of the company is growing as the nascent companies are taking advantage of Ansys solutions.

• HubSpot delivered a good quarterly result with revenue growth beyond market expectations, especially in terms of constant currency.
• The company also delivered an earnings beat as it added more than 8000 net new customers this quarter.
• In spite of the more challenging macro environment, HubSpot maintained a healthy growth retention rate largely given its low pricing.

• Company fundamentals have been and will continue to be the single most critical driver for BABA’s share price, although strong US dollar and geopolitics may complicate the situation.
• Expect BABA’s bottomline to reverse an eight-quarter down trend in coming September quarter on the back of disciplined capex and cost cutting, despite a challenging macro environment still pressuring topline.
• Importantly, investors have yet fully appreciated the improving competitive landscape thanks to regulation and rivals’ maturing businesses. See 30% upside in 6-12 months. Ripe timing to buy. 

• Toshiba’s 2Q results were not pretty with OP of just ¥7.5bn despite strong revenues of ¥855bn, weak orders and a downward revision to guidance as we predicted. 
• While we expected weakness, every downside risk we flagged came through and in greater force than we had predicted. 
• It is almost as if some divine force completely unrelated to management is hinting that you should go for the JIP bid if and when it comes through.

• ASML pre-released their updated view on demand and capacity – ahead of Nov 11, 2022 Investor Day – BETTER THAN EXPECTED
• Inflation now past peak and semi/tech likely see sustained bid. Even better for those  names that are monopolies in the EUV space = ASML and Lasertec
• Remain bullish Lasertec despite the recent rally. Better earnings and order outlook, and multiples to drive share price

• Alibaba driven gains largely offset record losses from Q1 although this has been widely expected as were updates on the timing of ARM’s IPO from FY22 (Mar23) to calendar 2023
• With Q2 losses, Vision Fund is clearly in the red for the first time since Q4 19 driven by downside for both public and private investments
• Buybacks are over and what appears to be renewed macro enthusiasm is offset by a stronger yen and a low discount to NAV

• Financial results were largely as expected with good news in fintech on a return to double-digit revenue growth but continued steep losses in mobile
• Mobile subscriptions fell by 280K (-9% over two quarters) as users of free plans churned off keeping YoY growth to 2%
• The company is keen on the potential once platinum band spectrum is available but that is up to two years away

• While the world moves on from the events of 2020 and the pandemic fades through the rear-view mirror, a cluster of fallout still clings to Starbucks, the world’s largest coffee retailer.
• The operational stress of the pandemic, as well as concerns over in-store safety1 , catalysed demand for unionisation in the company’s most integral market, the United States.
• Since the first store won its union vote in Buffalo, New York, in December 2021, over 330 stores in 38 states have filed for an election, yielding more than 250 successfully unionised stores.

• This model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.  
• They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts.  When the company’s issues become well-known, there is often multiple compression as well as a rerating.
• These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings. This week: Moderna, Sonos, Knowles, Juniper Tech

• Our Indian bank profitability and credit quality screens, in terms of credit quality metrics to end-September 2022, continued in a constructive vein, although pre-provision profitability trends generally softened
• The solid macro-economic backdrop has supported credit quality to September-end, as the declining NPA ratios and cost of risk show; yet India may be approaching peak level for its macro-indicators
• Much good news is discounted by the macro and easy credit conditions; we are negative on State Bank of India and ICICI Bank, but we remain positive on HDFC Bank

• Qualcomm delivered a mixed set of results as its revenues were higher than the market expectations as a result of a solid chipset business performance and good execution of its diversification and expansion plan.
• The management is working towards transforming Qualcomm from a wireless communications provider for the mobile industry to a provider of linked processors for the intelligent edge.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• ASRT reported third quarter revenue that were down from the second quarter due to ASRT deciding to remove Indocin from the Government’s voluntary 340b pricing program
• The addition of Sympazan gives ASRT a new asset in growing revenue and adjusted EBITDA in 2023
• ASRT reported third quarter revenue of $34.2 million compared to our estimate of $31.6 million. We were expecting ASRT’s commentary related to Indocin would yield lower revenue than it did.

• Over the last five quarters, monthly transacting customers have increased by 36%, QoQ, the pace could be slower, but the trend remains upwards. 
• AOVs and Order frequency have the potential to inch up, but only over the long term.
• Take rates are inching up, delivery fees are going higher, and with a higher market share Zomato (ZOMATO IN) ‘s food delivery business is expected to continue improving. 

• South Korea’s largest e-commerce company, Coupang (CPNG US) is no longer a growth stock with revenue expected to start falling on a YoY basis from 4Q22 onwards.
• Therefore, we think Coupang’s current valuation, which is based on inflated revenue estimates should become redundant.
• We think a no-growth, low-margin business like Coupang does not deserve to trade north of 10.0x OP, whereas it is currently trading at 15.6x the best-case OP estimate.

• Chinese carmaker BYD Co. Ltd. has unveiled its first luxury brand of electric vehicles (EV), joining its peers in efforts to impress wealthy domestic buyers
• The launch marks BYD’s latest step into the high-end auto market as it tries to outgrow its image as a manufacturer of mid- to low-end vehicles
• BYD is China’s largest EV and hybrid vehicle manufacturer by sales. In October, its wholesale shipments surpassed 200,000 for the second consecutive month

• Naver Corp (035420 KS) (market cap of 28.9 trillion won or $20.9 billion) is our 2023 high conviction play.
• In this report, we provide a deep-dive analysis of Naver Corp and why we believe this stock has an attractive upside of 30%+ by the end of 2023. 
• Having followed the company for many years, I often like to think of Naver as“The Genius Turtle.”

• Our NAV analysis suggests a target price of 146.5 TWD for Sino-American Silicon Products (SAS), representing a lack of upside from current price.
• Sino-American Silicon Products’ stake in Global wafers represents 109% of SAS’s current market cap. 
• Two major risk factors on SAS include concerns about a global semiconductor sector downturn combined with increasing hostile political conflict between China and Taiwan. 

• Acceleration in earnings growth at Haier Smart Home Co Ltd (6690 HK) is an encouraging trend. We are happy to see expansion in both gross and operating margin in 3Q22.
• Further channel additions for Casarte and digitalisation efforts will bring positive profitability impact. Meanwhile, we welcome HSH’s increase in engagement of suppliers in product design process.
• Overseas growth has also accelerated in 3Q22 and there are numerous opportunities for HSH to expand its high-end presence and introduce new products in developed country markets. 

• Booking Holdings delivered a positive set of results in the quarter and managed an all-around beat.
• Their consumers reserved 240 million room nights in Q3, just under 0.25 million more than in Q3 2019.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Dr Lal PathLabs Ltd (DLPL IN) reported revenue growth of 7% y/y in Q2FY23, driven by 15% y/y growth in non-COVID business, which clocked highest ever quarterly revenue.  
• Although business growth was mainly driven by a double-digit patient volume growth, average realization per patient also increased 3% y/y to INR746.
• Amid rising competition, the company reported sequential improvement in bottom-line. Normalized EBITDA increased 20% compared to Q1FY23. Normalized EBITDA margin improved 310 basis points sequentially.

• Despite the continuing difficult and unstable global operating environment, Clorox managed an all-around beat in the last quarterly results.
• The fact remains that Clorox is already facing a number of macro challenges and future quarters may not be showing such a positive performance.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Caterpillar delivered another solid quarter with an all around beat and generated strong ME&T free cash flow and a higher operating profit margin.
• To expand its offerings in the construction industry, Caterpillar is launching four prototypes of electric vehicles that are powered by lithium-ion batteries.
• We provide the stock of Caterpillar with a ‘Hold’ rating and a revision in the target price.

• We believe the revenue growth will recover from zero in 1Q23 to 4% YoY in 2Q23.
• We believe the operating margin will improve in the following two years because the company is cutting unprofitable businesses.
• We set an upside of 43% according to other retailing giants’ price / sales ratios.

• Nexon is our top pick within the Japanese Gaming Sector 
• We see continued strong growth in revenue driven by existing game franchises in addition to new pipeline opportunities
• Nexon is cash rich, debt free and is returning more and more money back to shareholders

• Strong 1H orders and the second upward revision to guidance this fiscal year have lifted the share price to a new high.
• The energy shortage and high energy prices should continue to drive demand for Yokogawa’s oil, gas and power related industrial control equipment. Demand from other users is also rising.
• Valuations suggest 15% to 20% additional upside potential for the share price. Recession or a strengthening of the yen could put this at risk, so watch the order flow.

• TSMC is planning to build a second Arizona fab that could produce its highest-end 3nm chips, according to the WSJ.
• TSMC ADR Premium Impact: The TSMC ADR premium is near zero, and increased U.S. investor enthusiasm could lead to a significant bounce for the premium.
• INTC vs. TSMC Impact: News flow could favor TSMC over Intel over the next few days, at least until a November 14th conference Intel will be attending.

• Shanghai Pharmaceuticals Holding (2607 HK) reported strong result for the first nine months of 2022, with revenue increasing 8.5% to RMB174.6B. Notably, total revenue growth accelerated to 13% in 3Q22.
• With a leading market positioning and nation-wide distribution network, the company is well-positioned to benefit from the sector tailwinds. Easing of restrictions will provide a major impetus to the company.
• The company has been improving its innovative drug pipeline. It has 42 innovative products in its pipeline, six of which are in pivotal studies.

• The Keepers Holdings, Inc. (KEEPR PM) reported strong Q3 2022 revenue growth of 48.6% YoY and profit growth of 47.8%, led by strong growth in all categories of spirits.
• The stock trades at 8.2x FY22e/6.7x FY23e (numbers exclude the incremental earnings from its 50% stake in W&H, which we estimate could at least add 7-8% to our numbers).
• We will get more color from the post-results call on the 16th of November 2022 (aftermarket). 

• Pan Pacific International Holdings (7532 JP)’s 1QFY23 was broadly in line with consensus estimates with revenue and OP of ¥473.7bn (consensus: ¥473.8bn) and ¥23.9bn (consensus: ¥23.8bn) respectively.
• Personal brands growth and Asia expansion are driving up PPIH’s margins while most companies in the consumer sphere are failing to pass down cost inflation.
• With signs of OP moving to the pre-UNY acquisition level, we think that there’s an upside to the company’s medium-term guidance and consensus.

• We believe Tencent’s revenue will stop declining in 3Q22 and bounce back thereafter.
• We believe FinTech will grow fast, but online game will still be stagnant.
• We expect Tencent will have an upside of 67% for year end 2023.

• This past week, I had an interview with Lee Sanghyun, the founder and CEO of Flashlight Capital Partners (FCP) which is currently an activist investor on KT&G Corporation (033780 KS).
• Our interview focused on five key issues including valuation, buyback & dividends, ginseng business spin-off, investment horizon, and aligning management’s interests with those of its shareholders.
• FCP’s shareholder return plan is to 3x higher than the one currently proposed by the company. For further details, see FCP’s website https://flashlightcap.com/. 

• Across the board miss as DTC losses peak, park margins weaken, and linear likely to fall off a cliff. 
• Big FY2023 guide down on revenues (HSD vs. LDD previously) and OI growth (HSD vs. ~25% consensus previously). 
• Disney profitability lower for longer as macro headwinds on parks, accelerating cord cutting, and pushed out D+ profitability means OI likely down $2B in both FY23-24.

• Softbank Group (9984 JP) massively ramped up share buybacks in October driving a 31% increase in the share price
• Average Daily Volume (ADV) was 28% higher in October and 46% higher for the last half of the month. October buyback volumes were the second highest for a month ever
• Whether Softbank announces additional buyback plans likely depends on the timing of the ARM IPO and that partly depends on Q2 performance

• NTT (Nippon Telegraph & Telephone) (9432 JP) announced Q2 results today during market hours. The stock had been trading up 1.1% on the day, but fell 1% in 5 minutes.
• It then spent the rest of the day grinding higher to end just higher than just before results. 
• NTT announced another buyback – this one on-market. It is only a little bit of a surprise.

• The share price is roughly flat since we turned Bearish on Nintendo citing concerns that the cycle had peaked
• Q2 results released today suggest that the hardware cycle has indeed peaked – Switch hardware guidance cut
• We see a lack of catalysts for the stock price over the next several months and remain bearish

• Results were mostly positive with strong forex-boosted revenue growth and mobile outperformance 
• An expansion of the buyback program helps sentiment as an additional Y150bn program takes FY22 buybacks to the highest single-year total since 2005
• Comments at the analyst meeting focused on underlying costs but management seems positive that it can manage with cost efficiencies

• Takeda’s dengue vaccine TAK-003/QDENGA has been approved in Indonesia and is awaiting consent from the EU. The company is also seeking approval from the US, Latam and other Asian countries.
• The company plans to launch the vaccine in December or early next year which will become the industry’s first immunisation against dengue after the problems faced by Sanofi’s Dengvaxia.
• In this insight, we take a look at Takeda Pharmaceutical (4502 JP) ‘s decade long journey into its dengue vaccine and its potential.

• At current prices, we like a pair trade between SK Telecom (go long) and LG Uplus (go short). 
• We believe the share price gap has widened too much in the past month in favor of LG Uplus and this gap is likely to close in the coming weeks.
• While LG Uplus tries to expand its non-telecom businesses, this may involve greater spending on marketing and promotions (as % of sales), which could be a drag on its earnings.

• Calbee Inc (2229 JP)’s share price fell 4% today from the top end of the trend channel as 2QFY23 OP fell short of consensus by ¥658m to ¥4.9bn.
• There was also a ¥3.5bn downgrade to full-year OP guidance on higher-than-expected energy and raw material costs. However, this seems too conservative, especially with 10-20% price hikes in September-November.
• In addition, share buy-backs are starting to become a regular part of shareholder returns with ¥12.0bn per-year in share buybacks in the previous fiscal year and the current fiscal year.

• Cipla Ltd (CIPLA IN) is a strong play in Indian generic pharmaceutical industry, due to its niche and differentiated respiratory and peptide injectable portfolio, which has less competition.
• The company has launched couple of complex respiratory products in the US market, which has accelerated its revenue growth. Multiple high-value launches are also lined up for this year.
• Cipla’s India business is on a strong footing, led by core portfolio tailwind in prescription and trade generics businesses. Q2FY23 marked the sixth consecutive quarter of market beating growth.

• First Solar’s bull run was halted by a below par result in the last quarter as the company failed to meet Wall Street expectations with respect to revenues as well as earnings.
• The company’s manufacturing plants produced 2.4 gigawatts of modules in the third quarter and sold 2.8 gigawatts.
• Besides, their current fleet’s manufacturing performance metrics remain consistent, and plans for the third manufacturing plant in Ohio are still on track.

• Maintain HOLD recommendation for DOHOME with a target price of Bt14.10. DOHOME’s 3Q22 net profit came in at Bt50m (-85%YoY,-84%QoQ),in-line with our forecast but below BB consensus estimated by 34%
• 3Q22 earnings sink both YoY and QoQ Its net profit came out at Bt50m (-85%YoY, -84%QoQ),the lowest level since listed.The 9M22 result accounted for 88%of full-year net profit in 2022.
• The significant drop in 3Q22 earnings pressured by lower margin from steel products, clearance sales in decoration materials category, and rising all products cost as a result from rising inflation.

• Astra International (ASII IJ)‘s recent 9M2022 numbers confirmed its position as a well-rounded way to play Indonesia’s economic recovery through autos and commodities through its controlling stake in United Tractors.
• The company has continued to deploy its war chest of funds from the Bank Permata sale, investing in commercial vehicle leasing, hydro-power, and digital banking in 3Q2022 alone.
• Astra International (ASII IJ trades on 9.0x FY2023 PER and 8.5x FY2024E PER versus its 5-year average forward PER of 14x, making it attractive at current levels. 

• 3Q22 result of Kunlun Gas is weaker than expected, but this is due to lower other income and surge in non-operating expenses. Without them, profit growth is actually more encouraging.
• While there is gross margin squeeze on higher input costs, Kunlun managed to reduce operating costs by 14.1%, successfully mitigated the negative impact.
• Kunlun Gas contributed 62.5% of 1H22 net profit of Kunlun Energy (135 HK). Its solid 36.2% 9M22 earnings growth still points to healthy underlying momentum for its parent.

• Akeso has made some business progress. We analyzed the commercialization outlook/concerns on its late stage products. Akeso still stays at the level of biotech, a long way from becoming biopharma.
• The core challenge is whether bispecific antibody can bring better marginal clinical benefits than the combination of two mab, and why patients are willing to pay higher price for them?
• The sales forecast of Akeso’s late stage products could be RMB2 billion to RMB3 billion. The market value by the end of Nov 4 was just reasonable but not undervalued.

• Tencent and Alibaba are rumored to be acquired by state-owned companies.
• Tencent charges for originally free function and JD.com re-organized to cut cost.
• Autohome’s revenue stopped declining in 3Q22 and it is time to accumulate.

• Industrials have been quite resilient this year. Their stocks prices have run up as sector earnings fared better-than-expected, and as investors have looked for safety under the cover of ‘real economy’ stocks during a year in which tech is down big.
• You may think that the train has left the station already with blue chip industrials like Caterpillar and Deere.
• They’re certainly trading near all time highs! But hold on. There is one train which hasn’t left yet, and that is Komatsu.

• REIT Watch – CapitaLand Reits see operational growth in Q3 CLI’s funds business comprises five real estate investment trusts (Reits) and business trusts listed on the Singapore Exchange (SGX).
• Ascendas Reit is now known as CapitaLand Ascendas Reit; Ascott Residence Trust is now known as CapitaLand Ascott Trust; while Ascendas India Trust is changed to CapitaLand India Trust.

• At the moment of writing this, it’s 2:30 pm on a Sunday and I am in a ground blind. Every year at about this time of the year I take a few days off of work to unplug, have a few drinks with other family members and run off to the middle of the woods.
• I get some of my best thinking done out here while I wait for a White Tail Buck to come by. It’s blissful.
• Regardless of where I am or what I am doing, I am and always have been committed to maintaining my transparency, my thoughts and my investing story/process to all of you.

• Fantasy Sportbook Operator DraftKings saw its shares drop by 28% at the close on Friday, recording the worst in its trading history even as its management and CEO remained upbeat about the company’s future.
• What was surprising about the steep decline was the fact that the company beat analyst expectations both on the revenue and EPS front in its most recent quarter while also raising its full-year guidance.
• The market remains skeptical about the company’s business model and its decision to prioritize growth over profitability, a stark comparison to its peers who have cut costs in recent months.

• Muji has been trying to both reduce prices and consumer perception of its price positioning in the past few years, both at home and abroad. 
• This has been hard but a new ¥500 chain will make it clear that Muji is shifting positioning.
• Muji will now even compete with discount and fixed price chains across food, home and clothing and the new price format will be much better suited to markets like China.

• Dr. Reddy’s Laboratories (DRRD IN) reported strong Q2FY23 results, with revenue growing 9% y/y, mainly driven by North America business due to launch of gRevlimid in the US market.
• GRevlimid is not a one-off opportunity and will contribute meaningfully over the next few quarters as well. Price erosion in the base business continues to be within normal range.
• Adjusted for the covid product sales during Q2 FY22, and the brand divestment income in Q1 FY23, Indian business has grown in mid-teens year-over-year and mid-single digit sequentially.

• Strong growth continues….GOV grew 30%, 2% ahead of consensus..no macro headwinds.
• New “disclosures” imply the core business is more profitable then presumed, rationalizing management’s investments in new businesses.
• Beat and Raise…one of the few online platforms to do this in the current environment…in a business (food delivery) that most didn’t think was habitual LT.