Equity Bottom-Up

• Grab‘s 1Q2024 reflected strong performance from its deliveries and mobility segments despite seasonal headwinds, with growth driven by new initiatives rather than increased incentives, with affordable products leading.
• The company has launched new products in the premium segment, with advanced bookings improving the most recent initiative, while its saver products are increasing spend, frequency, and retention. 
• Another key feature of the 1Q2024 has been the strong performance of groceries, driven by alliances with retailers, and booking higher growth than food deliveries. 

• Generative AI (GAI) helps capex, no doubt. But key question is whether capex can yield to revenue and profits;
• Content creation industry is sure to realize revenue and profits. iQiyi and NetEase already said so with concreate examples;
• Advertising can realize revenue by better matching of ads inventory and perhaps improve inventory utilization.

• In 1Q24, Trip’s revenue grew strongly by 29% YoY with all business booming.
• China and Trip achieved a lot overseas travelers in March and the Labor Day Holidays.
• However, the stock price has risen 37% in the past three months.

• VBL has a history of commanding high growth through acquisitions, product portfolio and geographical expansions and operating leverage
• Varun is now focusing on interesting geographies and products which will aid its next level of growth
• There could be more than bigger success stories like Sting for Varun Beverages if it can repeat history

• Pompeo advises Taiwan to innovate constantly in chip industry to maintain dominance and not be complacent.
• LG Energy Solutions may surpass Panasonic in launching mass production of 46800 batteries, a significant development in the industry.
• Canadian startup CEMWorks is positioning itself as a key player in semiconductors, 5G, and AI with its simulation tool. SDC and LGD lead OLED monitor market with fast growth and gaming focus. China’s internet giants see 1Q24 revenue soar thanks to AI technology.

• Japan Post Insurance (7181 JP) shows us that worsening policies in force is far more important to earnings than staggering growth of new policies.
• Returns and profit growth are weak and this should matter more than a puritanical focus on new policies, embedded value.
• Non-Operational line items, likely hedging costs and reserve adjustments, are cancelling out most all positives in operations.

• In Q4FY24, Cipla Ltd (CIPLA IN) posted 10% YoY revenue growth to INR61.6B. Despite surging R&D expenditure, EBITDA increased 13% YoY to INR13B, leading to 54bps margin expansion to 21.4%.
• New launches in U.S. and outperformance in the domestic market driven by chronic portfolio should drive the growth. For FY25, the company has guided for EBITDA margin of 24.5–25.5%.
• Cipla shares soared 15% YTD. Last week, the promoters, Hamied family sold 2.5% stake in the company for ~INR26B, igniting a rally in share price.

• The Q2 Fiscal Year 2024 was a good quarter for Apple Inc. as they saw growth in several international markets and set numerous records worldwide.
• The company reported revenue of $90.8 billion and an EPS record of $1.53.
• They also announced revenue records in over a dozen countries and regions, and an all-time revenue record in Indonesia.

• The DHIBM-7P pilot vertical well encountered 24 metres of net pay in an overall hydrocarbon column of 37 metres.
• The well was drilled from the pilot hole of the recently drilled Hibiscus South well that had already encountered 5-6 mmbbl recoverable resources.
• The bottom part of this well had been plugged ahead of drilling a horizontal producer in the area (this horizontal well will be drilled next).

• Dutch Bros has experienced growth during the COVID-19 pandemic but faces challenges in a more competitive market
• Despite improved financial metrics, the company is expected to see weakness in comparable sales and new store economics
• Investors are optimistic about Dutch Bros’ growth potential but there are concerns about its ability to sustain profitability and achieve long-term growth targets amid market challenges.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Operating profit turned negative in 1Q24 compared to 1Q23 due to the price war and the failure of new model.
• The company disappeared from the industry top-10 list of sales volume and revenue growth slowed down to zero in April.
• All cross-sectional comparisons suggest a Sell rating for the stock.

• EVs and smart driving systems in China’s car market impacted by price competition, leading to changes in industry dynamics.
• Blue carbon uncertainties could hinder progress towards achieving net-zero goals, says scientist, highlighting need for further research.
• Indian solar firm reducing dependence on Chinese imports for solar components to enhance self-sufficiency, aiming for greater control over supply chain.

• Company Forecasts extremely conservative at current and expected metal prices
• Scarcity Value for a liquid, large-cap gold miner in Japan
• Balance Sheet will allow future share buybacks and dividend in the harvesting phase

• In Q3FY24, Asahi Intecc (7747 JP) reported 8% YoY increase in revenue to ¥26B, ahead of estimate of ¥24B, mainly driven by the exchange rate impact of higher foreign currencies.
• Higher SG&A expenses impacted the profitability. Q3FY24 operating profit margin declined to 23.3% from 26.6% in Q3FY23, while net profit margin decreased to 16.0% from 18.5% during the same time.
• In Q4FY24, revenue is expected to decline 3% YoY to ¥19.6B. Operating and net profits are anticipated to plunge 74% and 26%, YoY to ¥417M and ¥832M, respectively.

• Shakey’s Pizza (PIZZA PM) reported Q1 FY24 systemwide sales up 15% YoY, but profits down by 15% YoY due to margin compression owing to higher opex costs.
• Management stuck to its mid-teens YoY revenue/profit growth guidance, citing that margin expansion will happen in the latter half of the year due to its visibility on costs.
• Trading at 13x FY24e PE, with a long runway for growth owing to the success in expanding Potato Corner, we believe the company can be a multi-bagger.

• Mandarin owns the One Causeway Bay precinct which is likely worth more than the company’s current Enterprise Value ($2.4b) having recieved an offer of $3.8b for the site in 2017.

• For those unfamiliar, this site is being massively re-developed into retail and office- not a hotel as might be expected given the company.

• Mandarin is transitioning to a capital light hotel management model by selling its owned hotels and maintaining management contracts with the purchasers.

• GlobalFoundries Inc. has presented its first quarterly financial results for the fiscal year of 2024.
• Despite facing some challenges, the outcomes have exceeded the guidance ranges indicated in the firm’s fourth-quarter earnings call.
• The industry is showing signs of emerging from a period of inventory correction and uncertainty due to ongoing macroeconomic and geopolitical issues.

• The first quarter of 2024 marked a period of continued momentum for Wynn Resorts.
• The company’s earnings call transcript highlighted several significant developments, representing positive and negative factors that could be relevant for potential investors.
• Starting on the bright side, Wynn Resorts reported an all-time record property EBITDAR of $647 million during Q1 2024, owing to the company’s solid team delivering five-star service and unique experiences to their guests.

• Henry Schein Inc, the leading global healthcare solutions provider, recently reported its results for the first quarter of 2024.
• The company reported solid earnings driven by gross profit and gross margin expansion as it recovers from last quarter’s cyber-incident.
• It’s worth noting that even with the cyber incident, Henry Schein marked an improvement in its merchandise sales growth.

• Ricegrowers Limited, trading as SunRice (ASX:SGLLV), has updated rice growers on paddy prices for CY23 and CY24, and more importantly provided planting guidance for CY25.
• Despite additional US supply and continued shipping disruptions, the lower end of the CY23 paddy price range (sold from FY24) has been increased $10/tonne to $425/tonne.
• The CY24 price range is unchanged at $370 to $430/tonne given the above uncertainties.

• After Taiwan Semiconductor (TSMC) – ADR (TSM US) N2 technology in 2H25F, A16 technology will be pilot-production in 2H26 and likely unveiled in around 1H27.
• TSMC A16 technology will be utilizing best-in-class backside power delivery solution.
• Si Photonics co-exists with traditional Substrates packages, linked with fiber.

• We are more bullish on PDD’s 1Q24 results on the back of better monetization of domestic e-commerce business and fast and quality growth of TEMU.
• We now expect 1Q24 adjusted earnings to almost double yoy to RMB20 billion, much higher than our previous estimate of 50% yoy growth and exceeding consensus by ~30%.
• Moreover, we believe earnings growth will be steady throughout 2024 instead of slowing down as we thought. 10x FY24 earnings against 80% yoy growth lead us to see 50%+ upside.

• While historically many new inclusions to the HSI have performed disappointingly after their addition, BYD Electronic (285 HK) looks unlikely to follow such a pattern.  
• Its share price has underperformed YTD, absolute PER valuations are not stretched and forward P/B multiple is only at the historical average level. These provide a good buffer.
• Its industry and business are not at structural and cyclical peaks, with further growth prospects from AI-enhanced products and solutions. A 33% surge in 1Q24 earnings also adds comfort.

• TSMC: +17% Premium; Has Remained Above 15% for Over Nearly Two Weeks
• ASE: +11.8% Premium; We Continue to View 14%+ as Range to Short From
• CHT: +0.6% Premium; Can Consider Shorting the Spread at Current Level

• Stellantis invested in Leapmotor and their joint venture will sell electric cars in Europe.
• Two vehicle producers, GAC and Li Auto, are dismissing employees.
• Tencent Music’s music revenue grew by 43% YoY in 1Q24.

• In 24Q1, the innovative drug projects and medical device projects ranked top two in domestic investment and financing deals, but investment in the field of AI cooled down.
• For biotech that located in China and only for China markets, it’s hard for them to generate good returns. It is recommended not to spend too much time on them.
• As the US House Committee advances the BIOSECURE Act to restrict WuXi AppTec/WuXi Bio last week, we listed some points worth the attention at this stage.This is far from over.

• The company has slashed FY Sep-24 guidance after missing 1H sales and profit targets by wide margins. Dividend maintained, 2-for-1 split planned and buyback under consideration.
• Capex has been cut, reflecting lower growth expectations. R&D also. Inventory adjustments will eventually be completed, but Chinese competiton will remain a problem.
• The share price has dropped 30% in the past year and 10.5% since May 8, putting the shares on 27 times EPS guidance. Still not cheap, but getting there.

• Arista Networks is well-positioned to take advantage of the rapidly growing opportunities in the artificial intelligence (AI) and cloud computing landscape.
• For the first quarter of 2024, the company reported revenue of $1.57 billion, representing a 16.3% year-over-year growth.
• Contributing a substantial 16.9% of this revenue was services and software support renewals.

• Bangkok Dusit Medical Services (BDMS TB) posted double-digit growth revenue, EBITDA, and net profit in 1Q24. International and Thai patients reported revenue growth of 12% and 10%, YoY, respectively.
• EBITDA grew at a faster pace of 13% YoY to THB6.8B, due to tight cost control. Net profit of THB4.1B beat estimates.
• BDMS opened one secondary care hospital with 113 registered beds in March. Phuket Cancer Center is expected to start operation in 3Q24.

• The Hershey Company reported optimistic market share trends in their Q1 2024 earnings.
• The firm has seen strong performances especially in seasonal sales and takeaway, with innovation being a significant growth driver.
• Its Reese’s Caramel product was quite popular among customers, with it not only being well received, but also helping drive strong merchandising especially around the Super Bowl season.

• Indian SMEs are new hot investment avenues selling stories to investors which might end to a case of pump and dump.
• SEBI in last few months have identified such cases in SMEs and microcaps.
• We delved into key guidelines on Indian Forensics to Identify and Avoid Storified Stocks

• Zen Technologies (ZEN IN) expands product range to drones, anti-drone systems, and medical simulators, enhancing opportunities beyond government contracts.
• Strong order book of Rs 1,401 crore, significant R&D investment, and government support for indigenous defence manufacturing drive growth.
• Zen Technologies (ZEN IN) diversified product portfolio and strategic government support position it well for significant growth in the defence and simulation markets.

• The key takeaway from this earning season on the topic of generative AI (GAI) is that in-house generated content has the greatest potential for cost savings;
• Taking a step further, mid-sized video platforms can also use AI to skip the curator layer, similar to Pinduoduo using algorithm to bypass small merchants to connect directly to factories;
• We also notice that general media platforms with ample advertising inventories tend to perform better with AI’s help, which is why ads of Tencent’s advertising performed better than Baidu’s.

• We turn positive on KakaoBank, for its increasingly secure competitive positioning in Korea, its attractive digital efficiency ratio, its low customer acquisition cost and for its high activity rate
• We switch our buy rating from PAN to Inter as the latter has improved operationally, it is sound on capital and attractive on valuations
• Nubank is executing well, but we remain cautious on Nubank shares as we continue to see potential capital constraints as a key risk, along with its stretched valuations

Dentsu’s Q1 results indicate a slow start to the year, with organic net revenue down by 3.7%. However, prospects are improving, buoyed by new business wins and weighted to H2, which leave full year expectations (and our forecasts) unchanged. The One dentsu initiative, bringing together skill sets in consulting, technology, media and creative, is supporting improved pitch win rates, and giving greater coherence and consistency to the group product and service offering. We expect this to be a central element of the new management medium-term strategy, set to be unveiled during H2. The rating remains at a substantial discount to global peers, which we anticipate will narrow as evidence of renewed growth builds.

Basilea Pharmaceutica has announced the triggering of a US$1.25m milestone payment from Pfizer, triggered by sustained strong sales of Cresemba in the Asia-Pacific region and China. This is the second FY24 milestone payment for the region and is incremental to the payment received in March. We note that, according to the latest available data, total in-market sales of Cresemba amounted to US$473m in the 12 months ending December 2023, representing a +26% year-on-year increase. Basilea is preparing to launch its Phase III programme for fosmanogepix, a broad-spectrum antifungal therapy, with the first of two Phase III trials expected to initiate in mid-2024. The company also made positive regulatory and operational strides with its lead antibiotic asset, Zevtera (following FDA approval in April 2024), and we eagerly await the announcement of a potential US commercial partner.

• Japan Post Bank (7182 JP) saw its net profit surge from non-recurring gains, which was from the sale of stocks. 
• The company’s cost of funds worsened more than the improvement in its yields, and we believe this remains an issue related to hedging costs.
• Unrealized gains on foreign bonds remains significantly higher now than a year ago and this may again be the driver for earnings, but still with very low ROA.

• Tencent reported C1Q24 revenue, IFRS operating profit, and IFRS net income in-line, 9.1%, 26% vs. our estimates and in-line, 16%, 21% vs. consensus;
• Game revenues were below our expectations while advertising was above, leading to a gross margin beat of 2.73ppt, powered by video account and AI. 
• We raised our TP to HK$450 to reflect the shift to better-margin revenue mix and upcoming revenue acceleration.

• In this insight, we discuss the additional financing requirements, changed shareholding structure, and the next steps for Eoflow. 
• Eoflow is one of the best performing stocks in the Korean stock market in the past one month as its shares have soared 249% in this period.
• The details of the oral argument (Insulet vs Eoflow) at the U.S. Appellate Court suggest that the U.S. Appellate Court may rule in favor of Eoflow.

• Tech titans foresee the obsolescence of AI PC by Computex 2024, sparking anticipation for new technological advancements.
• Disney and Warner’s collaboration in the streaming market introduces fresh competition, shaking up the industry landscape.
• ASML’s thriving in the Angstrom Era credits its success to relentless innovation and adaptability within the semiconductor sector.

• JD.com (9618 HK) announced a set of in-line results for 1Q24.  Sales growth was 7% yoy, in-line with my 1Q24 preview.
• Operating profit margin for the core JD retail business declined by 0.5ppt yoy to 4.1%, which is also in-line with my preview. 
• The positive surprise was a big reduction in losses in the JD logistics business, which brought the overall non-GAAP net profit growth to 17% yoy for 1Q24. 

• KPIT reported a strong Q4FY24 led by 5.1% QoQ revenue growth in constant currency (CC) terms. EBITDA margin came in better than expected at 20.7%.
• Overall, in line with our projection, KPIT even beat its upgraded guidance by posting YoY revenue growth of 39%+ in CC terms vs 37%+ guided.
• KPIT has guided for a strong FY25 with revenue guidance of 18-22% in CC terms and EBITDA margin of 20.5%+.

• LICHF faced some teething issues with technology during past 1Y due to which growth and reported asset quality had been subdued. However, with strong Q4FY24, LICHF is back on track.
• LICHF reported strong growth in disbursements. Q4FY24 disbursements were INR 18200cr+, a growth of 20%+ QoQ. NIM came in higher than expected at 3.15%, despite spike in bond yields.
• Asset quality improved significantly with Stage 3 assets declining to 3.31% vs 4.26% QoQ and Stage 2 assets declining to 4.20% vs 4.54% QoQ.

• Expedia Group’s Q1 2024 performance reflected a primarily healthy market environment, but growth differed according to geographical area and product line.
• Notably, North America had the slowest growth compared to other major international markets.
• Additionally, despite meeting projections on revenue and EBITDA, Expedia experienced weaker gross bookings, with its Vrbo business producing slower recovery than anticipated.

• WestRock Company, in the 3rd Fiscal Quarter 2023, posted a net sales of $5.1 billion, with an adjusted EBITDA of $802 million, higher than expected due to strong execution, productivity gains, and moderating input costs.
• CEO David Sewell attributed the strong results to the firm’s resilience and the hard work of its team, even as they faced comparisons with record results from the prior year quarter.
• However, certain challenges were also observed.

• In 1Q24, SK Biopharmaceuticals (326030 KS) posted Xcopri U.S. sales of KRW90.9B, up 69% YoY and 17% QoQ. The company remains confident to meet annual sales guidance of KRW390–416B.
• 1Q24 operating profit reached KRW10B from an operating loss of KRW23B in 1Q23. The company aims to achieve profitability throughout 2024.
• The company is seeking a second product to strengthen its U.S. and global business. Xcopri also has potential for indication expansion in near future.

• On first look, Alibaba Group Holding (9988 HK) missed on margins in 4QFY24 as adjusted EBITA declined by 5% yoy.
• We can give the company the benefit of the doubt given that the important segments of the company are heading into the right direction.  
• Alibaba returned USD13.4bn and USD16.5bn to shareholders in FY23 and FY24, compared to the current market cap of USD197bn

• Microsoft’s China AI teams relocate due to US rules, focusing on Wi-Fi 7 development for improved connectivity and performance.
• Amazon’s stake in Alchip suggests potential synergy in AI tech and expanded market reach, while Kymco launches eco-friendly e-scooter.
• Tencent Cloud partners with BRI and Hi Cloud Indo for banking innovation, while Veolia opens first regeneration plant in China for sustainable water treatment. Tron Future secures funding for counter-drone tech.

• BABA reported CY1Q24 top line, GAAP operating profit and non-GAAP net income 0.9%, (4.6%) and (6.7%) vs. consensus, and in-line, in-line, (6.9%) vs. our estimate;
• Results reaffirmed our positive view as increased investment is leading to significant improvement in key businesses: (1) Taobao/Tmall stabilized, (2) overseas e-commerce accelerated along with overseas AntFin and Cainiao
• We expect pay-off from its strategy shift in 2H of the year. Spin-off, dividends,and share buy-backs provide valuation support until then.We maintain BUY and US$85 TP, implying 9.5x CY25 P/E.

• Sea Limited (SE US) booked a strong set of 1Q2024 results from a GMV, revenue and adjusted EBITDA perspective, with fears of greater competition from TikTok failing to materialise. 
• The company has been investing in growth across all segments, with e-commerce driving and digital financial services driving growth but digital entertainment also seeing a return to growth mode. 
• Sea Limited continues to focus on its core competitiveness in pricing, improving service quality, and lowering the cost to serve through SPX Express, with advertising becoming a more meaningful contributor.  

• Profit continues to expand at Mitsui E&S after its transition to a holding company, now reporting over 400% profit growth for 9 months YTD.
• The company is doing well to keep its operating costs down, with an improving funding structure and balance, as its revenue grows more than COGs.
• We wonder if there will be more revisions upward to profit, with new initiatives and with a more proven recent track record.

• On 16 May, it was reported that the Korean financial regulators have approved DGB Daegu Bank to become the 7th commercial bank in Korea. 
• DGB Daegu Bank is the core entity of DGB Financial Group (139130 KS) which currently has a market cap of 1.4 trillion won (US$1.0 billion).
• This change will allow the company to expand in the more lucrative metropolitan Seoul and other regions in Korea. We have a positive view of DGB Financial Group (139130 KS).

• A Detailed understanding of Thermal cum Renewable Power house JSW Energy Ltd (JSW IN) Business and their ambitious target to achieve 10 GW by FY25.
• Strategy 2.O, where company is planning for 20GW by 2025, energy storage system.
• JSW Energy’s strategic acquisitions and focus on renewables enhance growth prospects, with a vision to become a leading renewable energy provider.

• Eisai Co Ltd (4523 JP) has guided for FY25 Leqembi revenue of ¥56.5B (~$366M), with ¥43.5B from U.S., and ¥10.0B from Japan. In FY24, Leqembi reported worldwide revenue of ¥4.2B.
• Leqembi is expected to grow significantly due to increase in prescriptions following the progress in the development of AD diagnosis and treatment pathways in the U.S. and Japan.
• The current rally can be short lived, as the competitor drug is expected to get FDA approval in 3Q24.

• Nissin Corp (TYO 9066) bought back 23.6% of their outstanding shares in a single day on May 10th and also doubled their dividend.
• The result? The stock went up about 39% (up 72% YTD).
• I already had a full sized position in Nissin Corp and despite being up big on it I added to my position at ¥4,265.

• Taiwan Tech and Nvidia Rally Ahead of Nvidia Earnings Next Week; Microsoft Build Conference Could Showcase Edge AI Copilot
• Hon Hai: Traditional Server Market Now Adding to AI Growth; Expects Market Share Gains in 2024E 
• Asustek: Margin Beat, Guides More Upside; Qualcomm for AI PCs; Why Asus Confident in AI PC Up-Cycle 

• We notice a pickup in consumer acceptance of instrashopping, as result of COVID-cultivated behavior. We notice similar business model worked outside of China (Coupang) for densely populated urban upper-middle-class customers;
• Meituan’s launch of membership is a wise step towards strengthening user stickiness and emphasizing transaction soundness over impulsive buying. Meituan’s portfolio in food, dining, hotel & travel offer unparalleled value;
• We see Meituan’s success in Hong Kong honed a replicable business model targeting single and low priced segment. Consolation on a global scale now seems a possibility.

• Alibaba Group Holding (BABA US)‘s FQ4 announcement portrays a resilient comeback to growth, suggesting the past four years’ challenges barely impacted its dominance in Chinese e-commerce.
• However, a closer look beyond the surface of Alibaba Group Holding (9988 HK)‘s FQ4 results announcement reveals that little has actually changed in recent months.
• Taobao and Tmall face challenges in a tough, stagnant market; AIDC’s growth largely covers for other Alibaba units’ failings, while AliExpress’s expansion cuts into margins.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• After a massive recent correction for HK stocks, we are more constructive on the names, and yields there look very attractive.

• Alibaba reported in-line revenue but disappointed adjusted net income for 4QFY24.
• Yet a closer look shows strong core Taobao/Tmall performance was offset by higher-than-expected losses incurred by peripheral businesses.
• We remain convinced BABA is on track to turn around and an earnings upgrade cycle is one or two quarters away. We are buyer at this price.

• US tariff hike on Chinese electric vehicles, solar cells, and semiconductors could raise costs for clean energy industry in China, affecting competitiveness and growth.
• AT&S to sell medtech PCB factory in South Korea, indicating potential changes in the global supply chain.
• AI rush leading to staffing shortages at companies like Amazon and Google, while India sees surge in AI spending by 2027.

• The Cigniti-Coforge acquisition presents a unique investment opportunity in the IT services sector, with potential for significant returns.
• Coforge plans to acquire a 54% stake in Cigniti Technologies, expanding its presence in digital assurance and AI services.
• The deal is expected to be completed by Q2 of FY25, with an open offer price potentially higher than the current market value of Cigniti shares.

• UPL Ltd (UPLL IN)‘s Q4 FY23 results show a significant improvement in margins to 13% after a drastic fall to 1% in December 2023, despite a 15% YoY revenue decline.
• Revenue drops were driven by lower prices and high-cost inventory liquidation, yet margin recovery signals operational improvements and potential future stability.
• Planning to reduce the debt by raising capital via right issue as well as IPO of Advanta.

• The slowdown in Chinese retail sales of apparel seems to have been factored into Vipshop Holdings (VIPS US) 1Q 2024 revenue growth expectations whilst bottom-line is supported by margin expansion.
• With net cash at ~40% of its market cap, the share price should be supported by the ongoing share repurchase program and its inaugural annual dividend policy.
• Its 6.6x NTM PE ratio (~4x ex-cash) seems extremely attractive for a highly cash-generative business set to (conservatively) grow earnings at high-single-digits whilst buying back shares and paying dividends.

• Recruit Holdings (6098 JP) reported 4Q and full-year FY03/2024 results today. Earnings beat own guidance as well as consensus estimates.
• Weakening labour markets have negatively impacted all business segments and new pricing model for Indeed has not really been successful.
• Recruit expects a recovery in 2HFY03/2025, but at the rate at which job openings are going down, we remain cautious.

• Inventory levels were at 90 days by the end of 1Q24, returning to a normal level.   
• It is expected to see consecutive QoQ growth throughout 2024, with normal orders observed since 2Q24. 
• Although Chinese mature technology is advancing, current analog capacity still falls short of local demand in China.

• Customer management as the largest business began to increase compared to the past two stagnant quarters.
• We believe margin will continue to decline as the company turned its focus to growth.
• We conclude an upside of 41% for March 2025 based on peer companies’ P/S ratios.

• The operating margin in 1Q24 reached the highest since 2Q16, as the gross margins of all businesses improved.
• The growth rate of online advertising is high than our estimate, but the growth rate of FinTech is lower than our estimate.
• We believe there is still an upside of 9% and the price target will be HK$415 for the end of 2024.

• In a surprise move, Intel announced that its foundry chief Stuart Pann is to retire from the company effective end of May after just over one year in the role
• He will be replaced by former IBM, Globalfoundries and Marvell executive Kevin O’Buckley, effective immediately
• Mr. O’Buckley now has the dubious distinction of being the third leader of IFS in as many years. 

• Tencent (700 HK) reported 1Q2024 results today. Both revenues and OP grew 6.3% and 30.0% YoY respectively and beat consensus estimates.
• Though domestic games revenues declined YoY, there were signs of recovery in Tencent’s gaming business. Online advertising saw strong growth despite 1Q being a seasonally weak quarter for Tencent.
• Tencent’s investments in high-margin products have helped boost the company’s margins across all business segments.

• Cheerwin is a strong turnaround story with significant earnings growth in 2023 with solid dividend yield. It is the number one player in the inspect repellent sector in China. 
• Cheerwin’s current price is 79% lower than the IPO  price. However, Cheerwin’s shares are up 35% YTD, sharply outperforming Hang Seng index which is up 13.6% YTD.
• We found Cheerwin (6601 HK) using Smartkarma’s Smart Score Screener system. We used the following screening methodology: Market cap – More than $300 million Dividends = 5 only.

• Grab‘s focus last year was offering more affordable products, which helped to increase its addressable market. FY2024 will see the rollout of a broader range of initiatives across economic segments. 
• This year Grab is rolling out more premium offerings and new initiatives, including advance bookings, family accounts, increased reviews, and new merchant features to grow revenue streams from advertising.
• The upcoming results are likely to reflect seasonal factors but should also reveal something about Grab’s new initiatives and the changing competitive environment, with GoTo investing more aggressively. 

• BAF reported a decent Q4FY24 led by strong AUM growth and robust customer acquisition. Adjusted for the impact of the regulatory ban, Q4FY24 results were in line with the expectation.  
• The biggest negative surprise in Q4FY24 was the 21bp NIM compression. NIM compressed led by AUM composition shifting incrementally to secured assets. 
• BAF is optimistic on growth across segments, except Rural B2C where risk metrics are somewhat elevated; however this should normalize, given Rural B2B is doing fine.

• Back in June 2022, US/Europe toll-road play Atlas Arteria (ALX AU) (ATLIX) rejected IFM Global Infrastructure’s request for limited company information, before deciding whether to submit a non-binding indicative proposal. 
• Undeterred, IFM, which held 15% of shares out at the time, bumped its stake to 19% two months later; and has continued to capitalise on Australia’s creep provisions ever since. 
• This morning, IFM is understood to have lifted its stake to ~26.5%, in an apparent attempt to gain additional board representation. Another tilt cannot be ruled out. 

• Taiwan launches IC Taiwan Grand Challenge to attract innovative teams and talent, offering opportunities to showcase skills and win prizes.
• Navigating AI investments during upgrades: on-premise or cloud computing? Make informed choices for hardware and software advancements.
• Taiwan’s LEO satellite program readiness questioned; virtual power plants used in Taiwan and Japan to mitigate earthquake risks; TPCA partners with Taiwanese industry association to boost talent and supply chains for Thai electronics manufacturing growth; Intel appoints new head of foundry services.

• GHCL Textiles (GHCLTEXT IN)  Aiming 25-30% revenue growth along with 15-20% average margins significantly increase the profitability of the company.
• Entering into value-added products like Functional fabrics and setting up their own manufacturing plant for fabric.
• Management Guidance on yarn prices, capex and debt profile of the company.

• Cafe De Coral Holdings (341 HK) share price never really rebounded post COVID despite its operating numbers gradually improving. 
• Haidilao International Holding (6862 HK) share price has rallied along with the Hang Seng Index (HSI INDEX) and Hang Seng China Enterprises Index (HSCEI INDEX) but not Cafe de Coral.
• Recent profit alert that, excluding pandemic subsidies, the group’s net profit will rise 470% YoY. 

• April revenue ~NT$236.02 billion, +20.9% MoM & + 59.6% YoY
• It was the company’s second highest monthly revenue ever, made all the more remarkable by the fact that it occurred during its seasonally low first half year
• Our April YoY Taiwan monthly revenue comps are flashing green across the board with just one exception, Globalwafers

• Shiseido Company (4911 JP) reported 1Q24 results last Friday.  Core operating profit declined less than expected at -10% yoy, and exceeded the management’s target. 
• The beat was driven by robust growth in Japan, Americas, and EMEA, while China steadily recovered.  Overall sales growth was 4% yoy in the quarter. 
• As a reminder, the investment thesis for Shiseido is twofold:  a recovering China mainly due to one-off concerns (nuclear wastewater), and a margin recovery story in Japan. 

• The new energy vehicle producers’ ranks changed a lot in April.
• GAC began to sell batteries to outside new energy vehicle producers.
• Kuaishou’s GMV (Gross Merchandise Value) increased by 420% YoY during the Labor Day.

• Asus’s 1Q24 earnings beat consensus by 46% thanks to major increase in operating margin driven by costs optimization. Adjusted Asus brand Op profit rose 227% YoY and 98% QoQ.
• Asus will host a major AI PC launch event May 21st, with additional AI PCs launched at Computex in Taiwan June 4th. Will feature Qualcomm Inc (QCOM US) Snapdragon processors.
• Asus confident in an PC upgrade cycle and has guided for sales to rise and margins to expand in the coming quarters. We maintain our Structural Long rating for Asus.

• ASE plans to boost sales in the second half of 2024 with cutting-edge technology and innovative solutions. Introspect CEO discusses how their GDDR7 memory test system outperforms competitors, helping customers stay ahead of the curve.
• Taiwan’s space dreams face hurdles from regulations and geopolitics, hindering progress. N Chandrasekaran becomes chair of Tata Electronics, signaling entry into semiconductor industry. Indian GaN startup targets global expansion in telecom and EV markets for growth.
• Triton ignites Taiwan’s push for satellite self-sufficiency; Apple partnership speculation with a leading EV startup generates buzz. Lam Research seeks chipmaking tool partners in India to drive innovation and collaboration. #Apple #EVstartup #newsroundup

• FY Mar-24 results were ahead of guidance, but management’s FY Mar-25 forecast has sales flat and profits down in the second half.
• The shares have dropped back 24% from their all-time high, bringing the forward P/E ratio down to 22X.
• China and foundry remain strong while North America and memory pick up. Guidance is probably conservative. Buy into the weakness.

• Takeaways: Biden plans to quadruple US/EU tariffs on Chinese EV imports.
• This will further defend TSLA’s domestic beachhead: 1) 50% EV market share in the USA (No. 2: Ford 7% ) + 2) huge headstart over domestic auto incumbents in assembly line processes (Gigapress) & high manufacturing concentration .
• Together, this should result in superior economies of scale which translates into lower unit costs — increasingly important in a commoditizing US EV sector.

• UI reported fiscal third quarter (March) results in line with our revenue forecasts suggesting the business could be on the rebound after two years in a challenging environment
• The performance in the June quarter comes even though peers have been reporting a tough selling environment with extended sales process as customers took time to make their decision
• The increase in product availability did backfire in the quarter with Ubiquiti taking a charge for obsolete inventory. Nevertheless, Ubiquiti’s results show a business that is improving

• GoTo Gojek Tokopedia (GOTO IJ) booked an encouraging set of 1Q2024 results which provided a first look at the new structure, whereby suddenly e-commerce became cashflow positive for the company. 
• The company booked strong headline growth with core GMV increasing by +32% YoY, despite incentive & product spending decreasing by -31% YoY, whilst adjusted EBITDA losses fell -89% YoY. 
• GoTo will drive growth less through incentives and more through innovative products, increasing the user base, and focusing on retention through its subscription products, with fintech becoming increasingly important. 

• Sumitomo Chemical issued new guidance in-line for 3/24 and xx% ahead of consensus for 3/25 EBIT, yet, the shares promptly declined by 10%.
• Traders were probably spooked by the company’s booking of ¥340bn in impairments that was ¥200bn more than published consensus, but we argue that this was more than already priced in.
• The only reasonable explanation for the reaction is that the market doesn’t believe the new guidance for 3/25. This could prove to be a huge mistake.

• MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.
• Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.
• Consolidation of the share price is likely to continue until orders and profit trends are confirmed.

• The National Health Commission and eight other departments issued “Opinions on strengthening the capacity building of critical care medical services”. New policy catalysts in the medical device sector arrives.
• Current valuations of weight-loss drug companies have “large bubble”, which have basically priced in all the potential of GLP-1s even based on optimistic assumptions. We advise investors to be rational.
• The price of core raw materials is showing a continuous upward trend, which will inevitably cause certain difficulties for Pientzehuang’s performance growth in 2024. Valuation has more downside ahead.

• Automotive display driver IC leader Himax reported 1Q24 results last week that were ahead of guidance. The company also guided for rising margins.
• Management believes 1Q24 represents a cyclical bottom for the company’s financial performance and expects automotive demand to rise in 2H24E.
• Himax rallied but remains 55% below its 2021 highs, yet its market opportunity larger than ever. Himax could be benefitting from different positioning within automotive chips than NXP & Infineon.

• The market is satisfied with BeiGene’s 24Q1 performance. The major reason for BeiGene to narrow net loss in 24Q1 was based on strong product revenue growth rather than cost control. 
• Given the varying pace of product promotion/R&D expenditure and the changes of product sales growth, BeiGene’s adjusted loss may achieve breakeven in a certain quarter of this year (e.g. 24Q4).
• BeiGene (6160 HK) is hard to cut costs largely. Sustained overall profitability may not be achieved until 2026 or 2027. But at least, we still see hope for a turnaround.

• China’s two national port companies China Merchants Port (144 HK) and Cosco Shipping Ports (1199 HK) have underperformed, but exports have picked up. We see an opportunity here.
• With a 9.2% increase in container throughput, CSPL even down by 4.8% YTD, underperformed CMPH by 12.9pp. There is room for it to catch up.
• CSPL is also cheaper at 7x and 6.3x PERs for the next two years, making it more attractive on a relative basis.

• We summarize our gleanings from the conference call with Dream International (1126 HK) to better understand growth opportunities and future expansion plans.
• The company is expanding in Indonesia to increase its capacity by 30 million USD ( over 830 million USD). (capacity utilization for FY23:83%).
• Trading at 4x FY24e PE, with an 11.4% dividend yield and a 15-year average ROE of 20%, this is a stock worth exploring. 

• 1H Results: On April 12, 2024, Paycloud Holdings Inc. announced its 2Q FY2024/8 earnings, its first earnings announcement since becoming a holding company and changing its name on March 1, 2024.
• In 1H FY2024/8, the company reported net sales of ¥1,990 mn, adjusted EBITDA of ¥226 mn, and operating profit of ¥86 mn. It had an irregular 5-month accounting period in 1Q FY2023/8 that included the July-August 2022 earnings following a change in the accounting period of the former Valuedesign Inc., which was merged with the company.
• As a result, the company’s earnings summary for 1H FY2024/8 show sales being down 12% YoY, adjusted EBITDA up 2% YoY, and operating profit up 237% YoY.