Equity Bottom-Up

• Total revenue grew by 15% YoY and operating margin improved YoY in 1Q22.
• The authorities began to grant licenses and new games will be launched in China and overseas.
• We set an upside of 25% and a price target at US$120. Buy.

• We believe UMC’s 3Q22 order is full, but the growth could be within 3% QoQ.
• Asian clients are turning weak, and US clients are getting stronger.
• The mainland China demand could be making an impact because of the COVID-19 pandemic.

• Aggression in adjacencies, market share gains and under indexed rural exposure presents an opportunity. 
• COGS Inflation, Risk of downgrading in case of a further hike loom and is a potential risk. 
• YTD Britannia Industries (BRIT IN) is an outperformer and could remain so.

• Imeik keeps its outstanding financial performance in 2021/2022Q1. On the surface, it looks prosperous, but its development strategy, product layout and resilience in front of risks would bring many uncertainties.
• Considering the pandemic/lockdown and a slowing economy in China, the revenue growth in 2022 could fall to about 50%, then to about 40% and 30% in 2023 and 2024 respectively.
• Imeik’s valuation is “unreasonably high”, which is expected to be lower than Bloomage in the future. Anything that deviates from fundamentals would inevitably return to the origin. 

• Otsuka Holdings (4578 JP) started 2022 on a strong note, with 13% y/y revenue growth in Q1. Growth was driven by four global products, which contributed 36% of total revenue.
• Otsuka has terminated its global license agreements with Akebia Therapeutics related to vadadustat for the treatment of renal anemia and recorded an impairment loss of ¥24 billion.
• Despite the impairment losses related to vadadustat, Otsuka reiterated 2022 guidance and expects double-digit growth in operating and net profits.

• Launched in late 2020, inPlay.ph is the first pure play online real money gambling platform aimed at attacking revenue of illegal sites.
• DFNN is also licensed for electronic gaming machines, a sports betting exchange and pari-mutuel betting for the government run Pagcor sector.
• Income from interactive tech platforms including the online gaming unit increased 116.6% for the quarter to 229.3m php.

• Grab‘s latest results sent a mixed message and if looked at YoY the picture looks gloomy but there is a strong sequential recovery with declining incentives for deliveries.
• Mobility is seeing recovery with higher incentives to bring on drivers and consumers but these should start to decline in 2H2022, with company guidance for revenues reflecting this. 
• Grab continues to build its financial services offering through digital payments coupled with BNPL, and growing a digital banking footprint. Valuations are attractive and it has US$8.2bn in cash liquidity.

• Snapchat’s guidedown resulting in a 30% drawdown is fantastical.  6x sales is now 4x sales, near alltime lows.
• Was guide down worth 30% drawdown given already valuation compression and  volatility of Snap guidance? Sour grapes here.
• Of course macro deteriorated. Who is doing Snap’s forecasting? We think forecasting easier to fix than LT competitive moat. We’d buy SNAP…but buy FB first!

In our next Webinar, we welcome Analyst Patrick Liao, who will go over his picks among Greater China semiconductor companies, exploring the outlook for the rest of 2022 and beyond.

The webinar will be hosted on Wednesday, 1 June 2022, 17:00 SGT/HKT.

• The end of Rakuten free plans is unlikely to have a major industry read across although the end of loyalty point chasing should help save on promotional costs
• Mobile erosion has likely peaked but full-year losses for FY22 will be higher than last year. We expect the progression to profitability to be modest
• Listing the securities business is a positive as it surfaces fintech value but allocating proceeds from valuable asset sales to funding mobile is not

• Kuaishou reported 1Q2022 results on Tuesday. Revenue grew 23.8% YoY to RMB21.1bn while reported operating losses declined to RMB5.6bn (27% of revenue) from RMB7.3bn (43% of revenues) in 1Q2021.
• Adjusted operating losses for the quarter further dropped to 24% of revenues from 48% of revenues in 1Q2021 despite drop in livestreaming ARPPU in 1Q2022.
• Kuaishou’s shares have lost almost 80% since its IPO in February last year due to the regulatory crackdown.

• Revenue increased by 24% YoY with online marketing, the main business, up 33% YoY.
• KS operating loss decreased to RMB5.1 bn in 1Q22 from RMB8.2 bn.
• We set an upside of 19% and a price target of HK$75.00. Buy.

• One of the curious share price movements this year has been the outperformance of Samsung Electronics versus other global tech peers including Apple, TSMC, Intel, and Xiaomi.
• Three reasons why Samsung is outperforming global peers such as Apple and TSMC may due to a potential war in Taiwan, COVID lockdown in Shanghai, and new pro-business Korean President.
• Caution is warranted on playing long/short on Samsung, Apple, and TSMC in the coming months as their tides appear to be driven too much by the whims of global politics. 

• Q4 results and FY22 guidance largely in-line with consensus and Redex expectations
• Shares trade at a discount to peers but should command a premium on potential mid-term growth prospects and lack of mobile exposure
• That may reflect relative size as Arteria lacks the scale and liquidity to attract interest from investors in search of defensive names

• EV start-up Faraday Future released their delayed Q1 2022 results & had some hair-raising disclosures on their first-ever earnings call. 
• Cash halved in the 3 months since Q4 2021 & dropped another 20% as of April 30th. Faraday didn’t deny that they have roughly a quarter’s worth of cash left. 
• We can’t see how Faraday raises cash in the current risk-adverse markets. And we don’t see any assets worth buying them out for. Faraday is in need of a miracle. 

• Share price down 35% since last December,  probably because FY Mar-23 guidance seems over-optimistic. Gearing to falling demand and rising costs is high.
• Sales and profits should eventually rebound as 5G smart phone and data center related demand continue to grow, and after new capacity comes on line in 2024.
• First rate IC substrate and printed wiring board technology, and sound finances, make the company a candidate for long-term investment.

• Three major positive factors for Samsung C&T include deep discount NAV, capital shifting to value/holdcos, and higher commodity prices boosting trading business earnings. 
• Shanghai lockdown remains a black box event and there are some increasing concerns that the China COVID induced lockdowns could result in a potential earnings miss for Samsung Electronics.
• Samsung C&T (028260 KS) has been outperforming Samsung Electronics (005930 KS). Samsung C&T is flat for the year versus Samsung Electronics which is down 13.6% YTD.

• HK inno.N (195940 KS)‘s K-CAB induces faster onset of action and can control gastric pH for a longer period than the existing treatments in acid-related disorders.  
• K-CAB is expected to start global expansion in 2022. The drug obtained marketing approval in Philippines. It is already approved in China and is under clinical trial in the U.S.  
• HK inno has entered into marketing alliances with several Southeast Asian and Latin American countries. The company aims to export the drug to 100 countries globally by 2028.

• Relative underperformance of Intel Corp (INTC US)  versus Advanced Micro Devices (AMD US)  over the last decade should reverse.  We discuss what it would take in the note.
• Intel leads in number and quality of innovations versus AMD in core areas of Design and Manufacturing, but AMD’s use of TSMC has been a huge part of AMD’s outperformance
• If Intel adapts to new realities and uses TSMC (2330 TT)  for next-gen products, outperformance versus AMD is highly likely otherwise given TSMC’s very significant lead in manufacturing very doubtful. 

• Botanee has outstanding performance at the current stage, but WINONA alone is not enough to establish a high moat. Its weak R&D/innovation in raw materials/products would cast doubts on outlook.
• Bloomage is more R&D oriented and characterized by integration of industrial chain. Its advanced synthetic biology will bring more possibilities for future development.The collagen would be a new growth point.
• Although with lower net profit margin, Bloomage is expected to have better outlook than Botanee. So, we think Bloomage could have higher valuation than Botanee in the future.  

• Last week analyst meeting came out with a positive tone regarding2022-25 earnings outlook.We reiterate our BUY rating for CBG and roll over target price to Bt125 (Previous TP is Bt115)
• We expect GPM to bottomed out in 1Q22 caused by 1) higher revenue contribution from branded own segment (higher than average blended GPM), 2) wholesale price adjustment by 1%-3%
• We expect CBG to show a strong performance in 2022-25 supported by recovery sales in Cambodia, solid revenue in Myanmar, breaking into the Chinese market successfully, growth opportunities in Vietnam

• The six value oriented Thai banks all have healthy credit quality, NPL coverage and sound capital adequacy ratios; in addition, encouraging cost of risk trends support the earnings outlook
• Of these, we believe Krung Thai Bank screens well, with its attractive pre-provision and post-provision profitability versus peers, whilst trading on relatively undemanding multiples; we also like Kasikorn Bank
• We see TMBThanchart as an early stage “turn around” stock, especially if management can improve credit quality, and push down its cost of risk sustainably to lower levels

• Analyst meeting came out with negative tone. We maintain BUY rating at Bt57.50, based on 21.3xPE’22 (+1SD of 10-yr trading average). Our TP and 22E downwards earnings revisal by 6% 
• 2Q22 should be lowest of the year due to declining sales from decrease by 25% in output in Chinese factories.Recommend accumulating shares,due to attractive valuations, prior to 2H22 earnings recovery.
• 2H22 earnings will recover from GPM expansion from revenue contribution from new SiC segment (consistently gross loss until now)and better product mix in IC Thai factory.Sales should also grow moderately 

• Kadokawa earnings were strong with 4Q OP 56% above consensus despite a meagre 1.5% beat at the revenue line. 
• Margin guidance was nonsensically conservative however as despite revenue guidance being in line with consensus the company guided for OP to miss by 25% and actually decline by 3.9% YoY. 
• That prompted a 16.3% decline the day after earnings but the stock has rebounded and now sits just 2.1% below its pre-earnings level.

• Last week analyst meeting came out in a positive tone. We maintain the BUY call based on target price of Bt48.0 derived using SOTP methodology, implying 9.0xPE’22E.
• The 2Q22 earnings is expected to improve QoQ from1 higher share of profit from HPC, 2)equity income from new 145MWe  gas PP COD in 1Q22.While full quarter profit from 476M 
• We see the 2022-25 outlook promising,considering 1)Steady earnings growth supported by 28% PP operating capacity expansion and 2)rising RE proportion which will rule out the ESG concerns and support rerating

• Kubota’s stock declined in sympathy with agricultural major Deere following a quarterly earnings miss
• Kubota faces similar supply chain and cost pressures, but it is the US housing market that is a bigger concern
• We believe that the market is underestimating the earnings risk for Kubota should the housing market start to cool 

• On May 20, Hang Seng Tech Index (HSTECH INDEX) took out ASMP (522.HK) and replaced by NIO Inc (9866 HK).
• Apparently, the EV has a better future outlook, and NIO is riding on the right wind even it’s still lost making.
• Meanwhile, we think ASMP’s should see another hike in 3Q22, and its revenue was forecasted between US$670 million and US$740 million in 2Q22.

• FY Mar-22 sales and profits were well ahead of guidance. Management is forecasting further growth this year, but mostly in 1H.
• Margins are under pressure from rising production costs and depreciation, but cash flow and the balance sheet are strong.
• Gearing to vehicle electrification and should provide protection on the downside and support long-term growth. 

• It’s understandable to take advantage of current market value and reserve capital in advance.Considering potential risks, how low the price of proposed issuance has to be to feel “safe enough”?
• Yingyi’s illegally reducing its holdings of WuXi AppTec could be a signal– Yingyi and other shareholders/executives are not confident in WuXi AppTec’s outlook, who may not regain its glory days.
• We recommend investors to view this proposed issuance rationally. If investors want to trade, a good strategy is to catch rebound after plunge, although the temporary rebound does not last.

• While Orient Overseas International (316 HK) will welcome its inclusion in Hang Seng Index, there is risk that it will follow the pattern that new inclusions performed badly post entry.
• Globally, many container shipping stocks have retreated from their peaks in Mar this year, but OOIL is still hovering around its peak level, making is susceptible to a correction.
• Challenging factors include softening sequential momentum, peaking out of spot rates, weaker demand picture, increase in supply pressure and declining earnings trend are weighing on the industry and the company.

• Dr. Reddy’s Laboratories (DRRD IN) reported 15% y/y growth in revenue in Q4, driven by strong performance across all the markets. Adjusted for one-offs, net profit grew 54% y/y.
• Despite pricing pressure, the U.S. business should continue its growth momentum with better traction in key products launched in FY22 and upcoming new launches, including generic version of Revlimid.
• Inflationary pressure (raw material, freight), lower offtake of COVID-related products in India, and currency headwinds in emerging markets are some downside risks for the company.

• We analyzed the different share price movements of SK Telecom relative to KT and LG Uplus from 2005 to 2022 when foreign ownership of SK Telecom remained above 99%.
• From 2005 to 2022, KT and LG Uplus outperformed SKT in 7 and 6 out of 11 periods, respectively when the foreign ownership of SKT was above 99%.
• Once KT’s foreign ownership rises to the 93-95% range, there will be more concerns about foreign ownership limit which means that LG Uplus could be in focus once again. 

• We anticipate the uptick in retail primarily aided by the wedding season to be short-lived for Hero Motocorp (HMCL IN). 
• HMCL has not been able to keep pace with changing consumer preferences, the limited success in premium segment and scooters is likely to remain an overhang even on new launches.  
• Inventory correction at the dealer’s end could aid wholesales supporting valuations, but the company remains structurally unattractive. 

• Taisho Pharmaceutical Holdin (4581 JP) is the leader in the Japanese OTC drug market. The company’s Lipovitan, Pabron and RiUP brands capture top market share in their respective categories.
• With the re-opening of economy, increasing number of people are indulging in outdoor activities and consumer spending is recovering. These should boost Taisho’s OTC drug business.  
• The company’s prescription pharmaceutical business is well-positioned for long-term growth, driven by strong performance of existing drugs and upcoming new product launch.

• Management is guiding for single-digit sales and profit growth in FY Mar-23, but new orders fell 39% from Q2 to Q4 of last fiscal year.
• The Book-to-Bill Ratio fell from 1.66 in Q2 to 1.01 in 4Q, but quarterly orders and sales both remained far above the levels recorded in the three years to Sep-21.
• Even if the company does not drop into the red as it did in previous cycles, the downside risk to profits could be 50%. 

• Ultrajaya Milk Industry & Trading saw continued growth momentum in 1Q2022 both for its core UHT milk business (No.1) and its carton tea business as mobility restrictions were lifted.
• The company also sources more of its milk requirements locally, which means less exposure to imported milk power but prices there have started to come off. 
• Management remains optimistic that the company can achieve double-digit growth this year plus it has increased ASPs by +3% in April. Valuations at a discount to staple peers. 

• Most of the countries that Frasers Hospitality Trust (FHT SP) has assets in have their borders already opened. 
• The full impact of the reopening will only be seen in the subsequent quarters thus it is almost certain that next quarter’s result will be better than the past one.
• The upside from privatization is mostly priced in but the recovery of the business is real albeit potentially gradual. 

For our next Corporate Webinar, we are glad to welcome Hyphens Pharma International (HYP SP) Chairman and CEO, Mr. Lim See Wah.

In the upcoming webinar, Mr Lim will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst Tina Banerjee. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 7 June 2022, 17:00 SGT.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• At 4% below the COVID sell-off low level, Shiseido Company (4911 JP) is looking genuinely attractive over the medium-long term.
• In addition, there could be a shift in the short term market sentiment towards Japanese cosmetics with China’s COVID lockdowns expected to ease from the beginning of next month.
• With the downside risk limited to less than 10%, we think it may be a good time to start owning Shiseido.

• Eicher Motors (EIM IN) is well-positioned to offset margin pressures due to its aspirational brand, the success of its new models and exports. 
• Easing supply issues along with newer export markets provide a compelling runway for revenue growth. 
• While our estimates are in line with consensus,  we believe the YTD outperformance is likely to continue and any opportunities presented amidst market volatility must be exploited. 

• Amid recent market carnage, one of the strong turnaround stocks in Korea is NCSOFT Corp (036570 KS) which is down 54% from its highs in February 2021.
• Three major reasons why NCsoft’s share price will turnaround include attractive valuations, better control of labor costs, and strong pipeline of new games. 
• Short sale value/market cap ratio for NCsoft has declined materially in the past several weeks, reflecting increased optimism in the company’s future prospects. 

• Conference meeting on Wednesday came with negative news on 22E earnings prospects. We maintain our BUY rating with TP of Bt5.09, based on the tender offer price.
• Management expects no pushback in terms of creditor approval.We believe that the merger will also receive regulatory approval,but with several regulations to also protect consumers, which could impact NewCo’s potential.
• We revise 22E earnings down to Bt2.9bn loss from Bt736m loss, previously, to reflect higher D&A costs and ARPU decline due to harsh competition in 2022.

• Maintain BUY rating with TP of B23.00 derived from 16xPE’22E, which is close to +1SD of 5-years trading average. Our rating reflects strong pet food growth outlook, attractive 3.8% yield
• We foresee earnings momentum to improve QoQ in 2Q22, supported by better pet food business unit from new capacity, and further strengthen by Baht downtrend.
• In our view, the new pet food capacity should gather pace in 2H22, upon better demand in light of favorable macro dynamics. Moreover

• Yesterday analyst meeting came out with a positive tone.We reiterate our BUY rating for SAPPE with a target price of Bt35.25 (+10% from previous TP)based on 24xPE’22E, close to +1SD
• Management targeted revenue at Bt10bn by 2026 or +22%CAGR(2022-26). •In our view, SAPPE target is quite challenging amid concern over rising inflation situation. 
• We expect 2Q22 earnings to continue to grow YoY and QoQ supported by (1) higher oversea market penetration, (2) distribution channel expansion,  (3) more effective marketing activities

• Analyst meeting came out with a positive tone regarding 2022 outlook.We maintain BUY rating with a target price of Bt38.0,based DCF method (WACC of 8% and terminal growth of 2%)
• Positive 2022outlook as we expect the hotel industry to make a strong come back in 2022due to vaccine roll outs and easing of international travel restrictions,making the earnings positive for2022
• Since 1Q is typically the lowest travel seasonality,we expect the revenue from hotels to grow for next 3 quarters (around 50% by 4Q22), contributing around 75% of the total revenue.

• Grab (GRAB US) reported 1Q2022 results. IFRS revenue increased 6% YoY to $228m (vs consensus $142m) and negative adjusted EBITDA of $287m ( consensus $291m) compared to $111m in 1Q2021.
• The company’s deliveries biz saw a strong recovery in revenues post disappointing performance in 4Q2021 and the acquisition of Jaya Grocers partially contributed to this growth.
• Grab’s Mobilities biz has not yet recovered to pre-pandemic levels due to Omicron-related restrictions in the first two months of the quarter, but set to benefit from recovery in travel.

• In 1Q22, Xiaomi’s revenue decreased by 5% YoY in 1Q22 and the main business, smartphone, decreased by 11% YoY.
• Both global and domestic markets shrank and the competitor “Honor” came back.
• We conclude a downside of 26% and price target of HK$8.10.

• Screen Holdings beat FY Mar-22 profit guidance by a wide margin. This year, management is aiming for 12% sales growth and a 22% increase in operating profit.
• New SPE orders have exceeded sales for seven straight quarters and the backlog is at a record high. But 1H of FY Mar-23 is expected to be weak.
• A new factory is scheduled to come on line in 4Q, raising total SPE capacity by 20%. The risk is that this will coincide with a downturn in demand.

• Safie’s 1Q results disappointed the market as revenue came in 5% lower than the average of two consensus estimates and R&D expense surged. 
• Nevertheless, 1Q should be the worst quarter of the year as downside from the specific distributor issue is now quantifiable and the stock is now on 2.5x 2022 EV/Sales. 
• Valuations are already highly compelling and if the sentiment driven sell off continues we would be looking for 5-10x returns over a 3-4 year timeframe.

• Impressive Analyst Day Presentation got us bulled up on the potential for Afterpay to juice growth on both Square and the Cash App
• Cash App getting a design overhaul to create a super app that spans commerce, investing, payments, personal finance, loans, etc. 
• Unit economics outlined today lead us to a ~40% potential EBITDA margin in 3-5 years…well higher than is currently considered by consensus today. 

• We maintain our BUY call with a target price of Bt58.0, derived using SOTP methodology, implying 51x PE’22E. The rising gas price has relatively lower impact on GULF’s earnings performance 
• Positive 2Q22 and 2022 outlook,The revenue recognition from GSRC unit 1,2(COD in 2021), unit 3 commencing operation in 2Q22,along with equity income from INTUCH, should drive 2Q22 profit both YoY&QoQ.
• 27% power generation capacity expansion in 2022, including 1.3GW IPP gas power plant (TH), 100MW solar roof top (TH) and 128 MW offshore wind (Vietnam).

• Sumitomo Dainippon Pharma Co (4506 JP)‘s flagship drug Latuda will loss patent protection in the U.S. in 2023. Latuda is already seeing revenue erosion.  
• Sumitomo is expected to reap the benefit of new products launched in the U.S. market in 2020 and 2021. These are expected to gradually become next growth drivers.  
• The company has a rich pipeline and targets to launch at least two new drugs in the U.S. in next two years.  

• We downgrade to HOLD rating from  BUY rating with TP unchanged at Bt43, derived from  DCF (WACC of 10% and TG of 2%), implying 28.6xPE’23. 
• The company reported a net loss of Bt44m in 1Q22 compared to net loss of Bt476m in 1Q21 and net profit of Bt152m in 4Q21 in line with our expectation.
• 1Q22 EBITDA doubled YoY but remained flat QoQ at Bt951m supported by strong YoY recovery of hotel performance benefitting from 1) Rebound of Thailand tourism 2) Continued strong operations.

• Yesterday analyst meeting came out with slightly positive tone. However, weak short-term performance from rising energy cost and lower consumer purchasing power and limited upside to our target price
• From management guidance, gross profit margin will be decline 50bps YoY in 2022 due to a rising energy cost and raw material in packaging business and consumer supply business. Meanwhile
• We have positive view on medium to long-term performance supported by better modern retail performance (BigC). Currently,BigC market share was at 21% (+1% to 2% YoY) and we expect BigC 

• This model seeks companies that are potentially “overearning”, defined as companies with unusually high margins relative to their own history or relative to the industry. 
• The reasons for the margin increases are sometimes unsustainable or fraudulent. The  critical judgement involves to what extent unsustainable margins are embedded in a company’s forecasts and/or the stock’s valuation. 
• These shorts tend to have moderate to higher betas, higher valuations due to recent strong results and good short responses to subsequently disappointing earnings.

• Sea Ltd released a solid set of 1Q2022 results, with very strong YoY growth in e-commerce GAAP revenues, and a predictable softening of gaming revenues given greater mobility in 1Q2022. 
• A key highlight was improving profitability with the adjusted EBITDA loss per order falling 70% in South-East Asia and Taiwan. Management also signalled that gaming revenues started stabilising end 1Q2022.
• Sea Ltd (SE US) saw a strong rally post these results given guidance was maintained albeit with a wider range. Sea Ltd is now trading at a discount to peers.

• Authorities encourage platform economy and restarted approving the licenses for new games.
• Fintech just met a high comparison base in 1Q21 and we believe the growth rate will rise.
• We believe the stock has an upside of 39% for the year end 2022.

• Tencent (700 HK) reported 1Q2022 results today. Revenue grew 0.1% YoY to RMB135.5bn (vs consensus RMB140.7bn) while reported OP decreased 34% YoY to RMB37.2bn (vs consensus RMB37.3bn).
• Adjusted OP was down 36% YoY to RMB22.3bn while adjusted OPM declined to 39.2% from 56.1% in the same period a year ago.
• Tencent’s 1Q2022 revenues were below our estimates of RMB144.3bn which was mainly due to significant drop in Fintech and business services revenues.

• Square Enix results were mildly above consensus (by 2.4% at the revenue line and 3.4% at the OP line). 
• The company did not provide guidance on account of the pending transfer of its overseas development studios. 
• However, we expect the sale to lift a significant burden from the bottom line enabling significant YoY OP growth.

• Sea’s share price rose 14% yesterday after beating consensus revenue by 1.4%, but this seems unwarranted as Sea lowered the lower-end of the e-commerce revenue guidance by $400m to $8.5bn.
• Nonetheless, most of this price reaction could be short covering as Sea Ltd (SE US)’s results were rather disappointing on multiple fronts.
• With Free Fire faltering fast, we think Sea could get washed back to rough seas before reaching calm waters.  

• Daifuku’s 4QFY22 was strong with revenue of ¥143bn (+3.8% vs. consensus) and OP of ¥17.3bn (+8.2% vs. consensus). 
• Guidance was relatively strong at the top line, 1.1% above but margin assumptions were far too conservative resulting in a 4.1% miss vs. consensus. 
• One may think that creates upside potential but guidance for 2H to grow vs. 1H is optimistic and valuations are too stretched to withstand a deceleration in earnings momentum.

• Yamaha’s 1QFY22 was weak with revenue of ¥482bn (-1.5% vs. consensus), and OP of ¥40.1bn (-17.3% vs. consensus). 
• The company’s FY22 guidance remained unchanged projecting ¥2,000bn in revenue (-2.0% vs. consensus) and OP guidance of ¥190bn (-4.5% vs. consensus). 
• Beating guidance significantly will now be difficult without price hikes but valuations are too cheap to ignore.

• We believe there is an attractive pair trade of going long on LG Chem and going short on LG Energy Solution at current levels. 
• Main reasons why we like this pair trade include large shares that could be sold after 6 months lockup for LGES, LG Chem’s attractive valuation, and shift to value stocks.
• In the past one month, LG Energy Solution is down 5.3% whereas LG Chem is up 2.4%. We believe this gap could widen in the next several months. 

• Q1 22 operating figures are better than the smaller peers although not exactly beating Anta. 
• Launching the cafe to boost SSSG post-COVID-19 is a positive strategy. 
• Its valuation is currently trading below its historical highs . Turn positive on Li Ning (2331 HK) .

• Convenience stores in Japan aren’t known for their fashion prowess although most sell the odd sock and underwear.
• FamilyMart Co Ltd (8028 JP) sees an opportunity to both expand sales categories and increase margins with higher value fashion basics supplied by its new parent Itochu Corp (8001 JP).
• Itochu is a leading fashion supplier and has created a hit product range for Familymart as well as another in cosmetics.

• Besides as nationalistic consumption play, Haier Smart Home (6690 HK) also offers attractive investment theses with bright growth prospects. Despite share price rebound, valuations are still not yet reflecting fundamentals.
• The surge in demand for refrigerators and freezers during the pandemic-led lockdowns has boosted HSH’s business in 4M22 while it will also reap benefits from Rmb depreciation.
• The government’s support of healthy development of residential real estate market will be positive towards smart home appliance demand which HSH is set to gain from its leadership position. 

• Harmonic Drive posted revenue that was a touch above guidance but just below consensus and rather weak OP of just ¥2.23bn. 
• While that was just below consensus it represented a deviation from typical gross margin and SG&A trends that is concerning. 
• More troubling however is the drop in orders and particularly the composition thereof.

• SMIC reported revenue/GM were US$1,869/40% for revenue/GM in 1Q22 respectively. The revenue matched to our expectation, but the GM was exceeding ~8% versus guidance.
• The outlook is a little bit lower than our expectation for revenue/GM to be US$1860-1,897/37-39% in 2Q22 guidance.
• The overall demand situation is growing up although inflation, Russia-Ukraine war, and other factors may affect. 

• SMC 4QFY22 was in-line with consensus revenue estimates at ¥185bn, but missed at the OP level with ¥52.7bn (10% below consensus) in a now familiar pattern for the sector. 
• The company’s FY23 guidance was strong projecting revenue of ¥805bn (+4.5% vs. consensus) and OP of ¥265bn (+6.9% vs. consensus). 
• The problem is that this ignores the typical cyclicality for the company and we believe OP will in fact be down YoY.

• JD will continue to close its unprofitable minor businesses in following quarters.
• The growth rate of total revenue slowed down in 1Q21 due to weak demand of home appliance.
• We believe JD has a significant upside despite that the revenue growth will continue to slow down.

• Tencent Music (TME US) reported 1Q2022 results today. Revenue declined 15% YoY to RMB6.64bn (vs consensus RMB6.69n) while reported OP dropped 35.7% YoY to RMB749m (vs consensus RMB817m).
• Revenue from Online music services declined YoY for the first time since 2017 while revenue from Social Entertainment services further declined during the quarter.
• We expect TME’s earnings to remain under pressure with increased competition and regulatory restrictions on livestreaming sector.

• Asahi Group Holdings (2502 JP)’s 1Q22 OP of ¥9.0bn from ¥496.9bn revenue was significantly below the consensus OP of ¥34.0bn from ¥489.4bn revenue.
• Yet the company maintained its aggressive 2022 guidance, which expects domestic beer volume growth while prices are scheduled to increase by 6-10%.
• We don’t find this estimate credible, especially given that Asahi generates most of the domestic revenue from the price-sensitive high malt beer segment.

• Aier’s private placement was approved by the Shenzhen Stock Exchange, but we don’t think it signals a complete policy shift that private medical institutions are welcomed by capital markets.
• The high goodwill impairment risk and medical disputes are great concerns. However, if Aier changes its development mode, its performance growth would probably slow down or becomes uncertain.
• Aier’s Q2 performance could be affected by pandemic/lockdown. Even after continuous corrections, Aier is still overvalued based on current valuation, which has not priced in all the concerns and risks.

• Last week analyst meeting came out with neutral tone.We reiterate our BUY rating for CRC with a target price of Bt43.0,based on DCF (WACC of 8.2% and TG of 2%)
• Management maintained its key 2022 financial guidance. CRC targeted 2022 sales growth of 15%-20%YoY, mainly from fashion business and targeted GPM retail sales to expend by 100-120bps YoY.
• •CRC showed three measures to mitigate the effect from uncertainties under global issue such as(1)cost optimization by controlling OPEX growth to not be higher than 50% of total sales growth

• Aeon has finally published numbers on its e-commerce growth and performance.
• It has a ¥1 trillion target for FY2025 and while this is still a far off target, Aeon is making progress. 
• Digital sales have doubled in the past two years and Aeon is now well ahead of Seven & I which continues to fail to present a coherent e-commerce plan.

• Sea Ltd (SE US) reports 1Q22 results tomorrow and we expect results to follow the overall sector’s trend of weak revenue growth but lower losses.
• Consensus 1Q22 revenue expectation was lowered in the last three months but there’s still a bit more downside due to Free Fire’s struggles.
• The biggest risk is the remaining three quarters of 2022 and the next year as consensus revenue seems too bullish with estimates of 42% revenue CAGR through 2021-23.

• Dowa missed at the PTP line by 4.5% and guided for just ¥55bn in ordinary profit for FY23 vs. consensus at ¥68bn. 
• That drove the stock down 13% today making it give up all the gains it had made since early December. 
• While the reaction might be understandable on the misses if this were trading expensively, it is 0.74x book.

• Despite supply chain and material cost headwinds Mazda beat consensus FY OP estimates by 15% despite being in-line on revenue. 
• Guidance was also 17% above consensus but we think both should be ignored because guidance is being sandbagged and consensus remains clueless. 
• We expect sales volumes to beat Mazda’s guidance slightly and for OP generation to be ¥240-300bn rather than ¥120bn.

• Mitsubishi UFJ Financial (MUFG) (8306 JP) announced results today. Operating Income +0.8%, Operating Earnings +45.9%, Net Profit +45.5% to ¥1.13trln. 
• The forecast for Mar23 is for a “target” of Net Income of >¥1trln. The DPS for Mar23 is set at ¥32 vs ¥28 last year and ¥25 the year before.
• And MUFG announced both the delay of the closing of Union Bancorp sale to calendar H2, and a big buyback of ¥300bn. 

• Recruit Holdings (6098 JP) reported 4Q and full-year FY03/2022 results today. Revenue grew 23.9% YoY to JPY759.9bn while OP more than doubled to JPY45.4bn during 4QFY03/2022.
• Full-Year revenues grew 26.5% YoY to JPY2,871.7bn which was about 3.0% above the upper range of guidance (JPY2,700-2,800bn) while OP of JPY378.9bn was within the guidance of JPY350-380bn.
• Though full-year results were strong, 4QFY03/2022 results show that the company’s earnings have begun to weaken with normalisation of recruitment and staffing markets with Covid conditions easing off.

• freee (4478 JP)  reported 3QFY06/2022 results on Friday. Revenue grew 35.7% YoY to JPY3.65bn (vs consensus JPY3.63bn) driven by strong growth in paying users.
• Operating losses declined to 18.5% of revenues during the quarter from 24.0% in the same period a year ago.
• The company’s shares moved up by about 9% at the end of Friday’s close following its earnings announcement.

• Leading dairy and premium foods player Cisarua Mountain Dairy continued to demonstrate its resilience during 1Q2022 despite some omicron disruption, and rising pressure from raw materials.
• Growth will be driven this year through capacity expansion and a focus on expanding distribution channels, especially through general trade and Miss Cimory MCM. 
• Management remains confident in the growth outlook and will potentially raise prices in 3Q2022 to offset inflationary pressures although powdered milk prices have already stabilized. Top consumer staples pick.

• FY3/22 EBITDA rose 96% driven by the recovery in the global labour market. Macro conditions suggest the coming year will be less exciting 
• EBITDA is expected to rise just 2% this year, adjusting for changes in stock-based comp 
• However, the 32% decline in the stock price YTD suggests the market is on top of the weaker outlook. We see 40% upside to the stock price 

• With Roche’s failure of several clinical trials on TIGIT project tiragolumab, the market’s future expectations on this target have discounted. Investors may need to get prepared in advance.
• Ociperlimab means a lot to BeiGene. If ociperlimab fails, BeiGene would have no big catalyst for a long time. BeiGene’s label of superior global R&D capability + potential BIC doesn’t hold water.
• Without ociperlimab, BeiGene’s valuation could fall back to about RMB60 billion to RMB80 billion. If the valuation is finally in line with Innovent, it would be no surprising.

• Honda 4QFY22 was mixed with revenue of ¥3,876bn (-0.7% vs. consensus) and OP of ¥200bn (+33.1% vs. consensus). 
• The company’s FY23 guidance was weak projecting just ¥16,250bn (-2.2% vs. consensus) in revenue and OP of ¥810bn (-15.1% vs. consensus). 
• Those numbers are laden with Honda conservatism, but we nevertheless foresee smaller potential beats by Honda than for peers.