Equity Bottom-Up

• Last month a new options program was announced, board members have two milestones to meet by 8/4/2024: get the stock over 0.45 SGD (50% vesting) & 0.60 SGD (50% vesting)
• Rex’s production in Oman has disappointed but AGM commentary makes us believe the worst is now behind us. A recent Straits Times interview confirms 20K BPD remains the LT target.
• Rex has instituted a good dividend policy and should now max out its 10% annual buyback authorization before dividends are paid later in FY22; win-win situation for shareholders and board.

• Binjiang Service Group (3316 HK) is turning out to be one of the most resilient private PMC in terms of margins and profitability with the conservative approach of the management.
• Trading at 12x/9.4x FY22e/FY23e with 25% of the market capitalization in cash, potential investors have the best of both worlds in value and growth.
• The company will continue to pay 60% of its earnings as dividends, resulting in a 5.2%/7.5% dividend yield for FY22e/FY23e. We believe the stock has the potential to re-rate.

• CP Vietnam (CPV), an 82%-held unlisted subsidiary of CP FOODS (CPF TB) (CPF), has applied for a listing on the Ho Chi Minh Stock Exchange
• CPV, an integrated agro-industrial and food business play in Vietnam, generated Bt111.1bn of sales in FY21, accounting for 21.7% of CPF’s revenue.
• CPV forms part of Cp Pokphand (43 HK) which was privatised in January this year. 

• The 1Q22 result of Dongfang Electric (1072 HK) kick-started FY22 with an encouraging new record high quarterly profit and a good recovery in YoY new order momentum.
• We are excited to see DEC managed to control its selling, administrative and R&D costs with a slight 2.7% YoY growth, compared with a solid 29.8% revenue increase.
• Recurring pre-tax profit growth is estimated to be over 30% YoY, and its order backlog at around Rmb85.4bn, 1.8x its FY21 revenue. We consider its 7.7x FY22F PER very undemanding. 

• Moderna Inc (MRNA US) reported strong Q1 results, with revenue and EPS beating consensus by 33% and 65%, respectively. The company reiterated 2022 Covid vaccine sales guidance of $21 billion.
• With the pandemic likely to evolve into and endemic phase with a more seasonal sales pattern, Moderna is advancing its vaccine and therapeutic pipeline beyond COVID.
• Beginning in the fall of 2022, Moderna could see three respiratory commercial launches over the next two to three years. Moderna is looking for potential M&A opportunities across the globe.

• Komatsu reported 4QFY22 results on the 28th of April and recorded revenue of ¥787bn (6.2% above consensus) and OP of ¥94.5bn (13.1% above consensus). 
• They also guided for revenue to increase 7.1% YoY vs. HCM which guided for a 6.3% fall driving a significant and premature share price decline. 
• The market has corrected some of that fall as it appears to increasingly agree with our call that HCM’s guidance was nonsense conservatism.

• Vanguard’s revenue is NTD$13.49bn, which is falling at the high-end of guidance NTD$13.2~13.6 in 1Q22. 
• Vanguard is likely to further raise price in 2Q22, and we expect revenue/GM could be NT$14.67bn/49.2% in 2Q22.
• Further price increase could hold in 2H22 because 1) the smartphone growth expectation is reducing in 2Q22, and 2) the US Federal Reserve increased interest rate to control the inflation.

• Pharmaessentia Corp (6446 TT) is advancing global commercialization of its flagship drug, Besremi, the first FDA-approved medication for polycythemia vera that patients can take regardless of their treatment history.
• Thus far, Besremi has been commercialized for polycythemia vera in 23 countries. Launch preparation is underway in four geographies including Japan, China, Singapore, and Hong Kong. 
• The company is conducting clinical trials for Besremi for other indications, including COVID-19. Pharmaessentia also has a rich pipeline of clinical-stage drug candidates. 

• We anticipate channel ONE average all day rating to climb back to top-5 tier channel by 2H22after fell down to no.7 in 1Q22.A recovery in rating will instantly benefit group 
• We expect the company to report 1Q22 net profit at Bt219m (+13%YoY +7%QoQ), the highest level in the past three quarter.
• NEE still hold strong position in the digital TV industry with high potential growth of contents distribution via online platforms, other businesses that started to contribute great portion of profit

• Although consensus looks a bit challenging, there could be a decent OP beat yet again in the third quarter.
• Meanwhile Pan Pacific International Holdings (7532 JP)’s valuation is still cheap and has decent potential for multiple expansion.
• Thus, there could be more upside to PPIH if the company dismisses whatever the remaining concerns over profitability through a reasonably strong third-quarter performance.

• Alibaba Group (9988 HK)’s fourth-quarter results will be out soon and we predict another disappointing quarter with mid-single-digit revenue growth.
• The company’s FY23 revenue guidance could be significantly weaker than the current consensus estimate as rumoured layoffs and budget cuts are likely to affect Alibaba Group (BABA US)’s growth.
• With the share price near the upper end of the trend channel leading up to 4QFY22 earnings, we think it’s a good time to add to existing short positions.

• PT Nippon Indosari Corpindo (ROTI IJ) released an impressive set of 1Q2022 results with higher wheat prices being offset by price rises plus greater operational efficiencies.
• Modern trade saw an especially strong recovery in 1Q2022 but general trade also saw good growth and continues to hit record highs.
• PT Nippon Indosari Corpindo (ROTI IJ) management remains optimistic on the outlook for 2022, with guidance for +15% growth in sales together with improving margins. 

• In this insight, we provide an updated SoTP valuation analysis of LG Corp (003550 KS) and discuss some of the key upcoming catalysts including the IPO of LG CNS.
• Our base case valuation analysis of LG Corp suggests an implied price of 107,664 won per share, representing 45.5% upside from current levels.
• The IPO of LG CNS is likely to be a positive catalyst in the next 6-12 months for LG Corp. 

• Nihon M&A Center (2127 JP) reported 4QFY03/2022 results last week. Revenue declined 20.5% YoY to JPY6.1bn (vs consensus JPY7.6bn) while OP decreased 60.3% YoY to JPY889m (vs consensus JPY3.1bn)
• Revenue for FY03/2022 increased 16.1% YoY to JPY40.4bn (vs guidance JPY39.bn) while OP increased 7.1% YoY to JPY16.4bn (vs guidance JPY18bn).
• The company also announced in December last year that there were irregularities in recording sales and the share price has declined 47% since then.

• Takara Bio Inc (4974 JP) reported 55% y/y growth in revenue during the first nine months of FY22, mainly driven by 129% y/y surge in COVID-19 PCR test reagent revenue.
• Although Takara Bio is likely to beat its FY22 guidance, uncertainty is prevailing for revenue earning potential beyond FY22, when the COVID-19 test demand will fade away.  
• We would stay away from this idea for now and wait on the sideline for a clarity of growth potential and recovery in the base business in FY23 and beyond. 

In our next Webinar, we welcome back Analyst Ankit Agrawal, CFA, who will share and elaborate on three high-conviction ideas from the Indian market, across sectors and market caps.

The webinar will be hosted on Wednesday, 11 May 2022, 17:00 SGT/HKT.

• Samsung Electronics (005930 KS)’s underperformance to SK Hynix (000660 KS) just part of the cycle or company specific?
• Does the supply constraint issue help or hurt Samsung?  Who is better off? 
• Key points to focus on to see where Samsung is vs. their blueprint of technology roadmap

• Shenzhen International (152 HK) has secured pre-tax gain of HK$2.8bn from deemed disposal of Qianhai Business and this is another example for its ability to realise underlying asset value.  
• SZI still holds a 50% stake in Qianhai Business, allowing it to capture further upside from this project. The transaction should also improve cash flow as land fees are repaid.
• Other logistics transformation projects like the South China Logistics Park, which has an area even larger than Qianhai Business, will provide upside for the longer term. 

• BAF reported strong Q4FY22 earnings led by 1) healthy AUM growth and 2) decline in provisioning. YoY, the NIM growth was similar to the AUM growth suggesting no margin compression.
• However, QoQ, BAF witnessed NIM compression, partly driven by interest reversal from a corporate account that became NPA. Overall, the management is confident of maintaining NIMs at current level. 
• The pace of core AUM growth also declined QoQ. However, this could be due to seasonality and despite declining pace, Q4FY22 core AUM growth was still healthy at 5%+.

• Maintain BUY rating with a TP of Bt445.00, based on 13.7xPE’22E, which is close to its 10-years trading mean.
• Unlock value potential through SCGCs IPO, citing a stronger position in PE/PP/PVC, fuel by solid olefins demand in Vietnam and Indonesia, increasing HVA products and Vinyl.
• LSP project is on planned at 93% completion, which is expected to COD in 1H23. We view the new capacity to come into operation in times of better petrochemical outlook.

• KPIT Tech reported strong Q4FY22 revenue growth (5%+ QoQ in constant currency [CC] terms). It also reported margin improvement, despite supply-side headwinds; with EBITDA margin at 18.6% vs 18.5% QoQ.
• FY23 guidance came in optimistic with revenue growth expected to be in 18-21% range in CC terms and EBITDA margin projected to remain stable in the 18-19% range.
• Demand environment continues to be robust with high visibility for growth. Q4FY22 total deal win was healthy at USD 200mm; including a large deal of Euro 70mm value.

• Monotaro’s 1Q22 topline was broadly in line with expectations but OP overshot consensus and company guidance by ¥355m and ¥396m respectively as SG&A fell short of the plan by ¥435m.
• Although the market treated MonotaRO Co Ltd (3064 JP) as a pandemic stock, it has stronger fundamentals than most pandemic winners.
• Shares are not cheap enough to be outright bullish but it is still a decent long hedge to short many other low-quality names.

• The 2021 report is the worst ever annual report of Hengrui, with double drop in both revenue and net profit.2021Q4 and 2022Q1 are also the worst two quarters so far.
• Although Hengrui has invested heavily in R&D and internationalization, it’s still trying to follow an established model with better security.Essentially, Hengrui is still the same Hengrui. Nothing has changed fundamentally. 
• For now, Hengrui hasn’t released any signal for “a reversal”. If going bottom fishing, investors may have to take a long, uncertain journey with Hengrui. Can you afford to wait?

• Yungjin Pharmaceutical Co (003520 KS) earns 15% of total revenue from exports. The company mainly exports antibiotic product cephalosporins to Japan.
• Yungjin’s export income declined 47% y/y in 2021 due to COVID. With Japan’s policy of reducing the usage of antibiotics, we are not upbeat on the recovery of this business.  
• Yungjin’s outlicensed new drug candidate completed only phase 1 trial. If the candidate successfully completes later stages of trials, it is expected to be marketed only in 2024.

• Square Enix announced the of sale Eidos Interactive, Crystal Dynamics, Square Enix Montreal and associated IPs to Embracer for $300m. 
• We had been puzzling over Square Enix’s strangely low guidance despite excellent momentum in its MMO business for some time. 
• Considering the underperformance in HD Games profitability and this sale we think we can now put two and two together.

• Japan Tobacco (2914 JP)’s 1Q22 was stronger than expected with revenue and OP surpassing consensus by 5.2% and 20.0% respectively despite the Russia Ukraine war situation.
• Although the company has maintained the semi-annual dividend at ¥75.0 per share, we predict there could be an upside to the DPS guidance during the next three quarters.
• With OP guidance of ¥534.0bn next year, we think Japan Tobacco should trade around ¥4,000-4,500 per share, indicating an upside of around 82-104%. 

• Latest earning show all of margin gain offset by worsening impairment costs
• One may argue that in the coming year the bank will finally fire on all cylinders
• It is not clear if recommended break-up of HSBC will come through or if it would help

• Novatek’s revenue was NT$36.512bn in 1Q22, which was 38.5% YoY and 62.6% QoQ. It was 50.73%/36.73%/30.5% GM/OPM/NM in 1Q22, which was higher than our prior expectation of 43.6%/27.3%/22.3% in GM/OPM/NM.   
• In our views, we revise up to be revenue/GM as NT$38.7bn/50.98% in 2Q20.
• As the inflation, 5G, Russia-Ukraine war did change the landscape, the outlook seems not that so much worse in 2022.

• Healthy 17.2% growth in 1Q22 net profit of Kunlun Gas, the most important subsidiary of Kunlun Energy (135 HK), provides a welcoming evidence to ease market concerns on costs.  
• While gross margin was down 0.2pp YoY, it expanded by 0.4pp QoQ. Key cost items including selling, administrative and R&D are all under control, boosting EBIT margin by 0.5pp YoY.
• 1Q22 is a record quarter for Kunlun Gas, and gearing stays comfortable with strong operating cash flow. We believe such set of result signals good 1Q22 for Kunlun Energy. 

• China Communications Construction (1800 HK) has bucked the trend of weaker earnings growth in the last two quarters by posting a healthy 17.7% YoY net profit growth for 1Q22.
• While gross margin contracted slightly, the good control on selling and administrative expenses have partly absorbed margin contraction. Its new contract value for 1Q22 has also reached record high.
• With government’s aggressive special purpose bond issue and infrastructure investment, we expect new contract momentum to pick up. Trading at 3.2x PER and 0.22x P/B, CCCC is massively undervalued.

• We believe BGF Retail and GS Retail are strong turnaround plays amid the end of the social distancing policies in Korea.
• These CVS plays are well positioned to withstand higher inflation rates and higher product price increases among the various retail channels in Korea.
• Valuation multiples of GS Retail have declined significantly in the past five years. Their valuations have become more attractive as compared to lofty levels 4-5 years ago. 

• SHEN reported an unexpected loss for the first quarter due to new system upgrades and the cost structure could remain elevated for the next 20 months
• SHEN’s revenue is pacing ahead of expectations on higher Glo Fiber subscription numbers. SHEN’s business plan requires additional capital expenditure spending to expand the fiber network for Glo Fiber
• The higher expenses in the quarter reflect SHEN implementing upgrades to multiple systems companywide. The new software would save $2 million annually after the 20-month phase-in process is concluded

• In 2021/22Q1, Mindray’s 20%+ growth rate is not easy in this difficult/complicated environment, but the market hopes to see stronger data and a fresh logic of growth to restore confidence.
• After China’s “new infrastructure”  projects finish, how to maintain its 20%+ growth could be a challenge in the long term if Mindray couldn’t make breakthrough in internationalization or innovation.
• However, Mindray is still a “safe play”. Its current PE/TTM is also more reasonable, but definitely not undervalued. It would be much better to long Mindray at a lower valuation.

• ATNI reported first quarter results where a seasonal decline in managed services (low margin equipment) had an impact on revenue, but adjusted EBITDA remained on track with our estimates
• ATNI is investing in its fiber network to grow the number of subscribers. ATNI’s Alaskan business should continue to maintain an uptrend in the number of subscribers throughout the year
• ATNI is reiterating full year adjusted EBITDA of $165 million to $170 million. We have increased our forecast to $167 million from $166 million

• Promised operating leverage is pushed out until likely 3Q22, but only higher employee RSUs is a permanent inflationary impact.
• Overcapacity is almost certainly transitory, as long as the retail business grows, this will be soaked up in a quarter or two.
• AWS backlog is booming again. Amazon’s current valuation = 12x forward AWS sales.

• As one of the few CXOs in the industry that has layout of the whole industry chain, Pharmaron carries many expectations. But it cannot compete with WuXi AppTec so far.
• If Pharmaron could make breakthrough either in its CMC services (improving gross profit margin and scale) or the CGT services, the Company’s outlook and valuation logic would improve greatly.
• The valuation of Pharmaron should be lower than WuXi AppTec and WuXi Biologics, but higher than Asymchem, Tigermed and Joinn. Considering the macro uncertainties, short-term trades are advised.

• Bukalapak (BUKA IJ) 1Q2022 results were all about execution, with significant improvements in take-rates for its Mitra business, and even more so for its marketplace segment. 
• The launch of AlloFresh and Allo Bank Indonesia will add some further depth and breadth to the platform’s product offering and help to accerlate the move towards profitabilty.
• Bukalapak (BUKA IJ) looks like an increasingly interesting way to play the Indonesian digital economy with an expanding ecosystem and increasing take-rates at the same time. 

• Growth in number of subscribers on the back of increased workforce, it may be temporary spike
• Cost pressure visible as per our expectation and the margins continue to be at lower level on Y-o-Y basis
• Buyback of shares within a year of QIP meets more than the eye

• Abbvie Inc (ABBV US) reported mixed results in Q1 2022. While revenue of $13.538 billion missed consensus by $70 million, adjusted EPS of 3.16 beat consensus of $3.14.  
• Q1 revenue from immunology portfolio was $6.141 billion, up 6.9% y/y. Management is still confident of delivering $15 billion combined revenue from Rinvoq and Skyrizi by 2025.
• The company has reduced 2022 adjusted EPS guidance to $13.92–14.12 from $14.00–14.20, to reflect an unfavorable impact related to acquired IPR&D and milestones expenses incurred during Q1.

• Global Cord Blood (CO US) is foraying into multi-billion-dollar cell therapy space through acquisition of privately-held clinical-stage biotechnology company, Cellenkos.
• Cellenkos utilizes umbilical cord blood as the raw material to develop T-regulatory cell therapies for treating autoimmune diseases and inflammatory disorders.
• Global Cord believes that Cellenkos is a perfect fit for the company and that its products can have distinct synergies with the company’s existing line of business.

• China Education Group (839 HK) demonstrates resilience amid market concerns on policy uncertainties by posting a 40.5% growth in 1H22 reported net profit and 20.1% growth in adjusted net profit. 
• Higher education segment saw 44% profit growth and strengths will sustain into 2H22. Weaker secondary vocational and global education segments will witness a sharp recovery, based on latest application statistics.
• CEG has secured increase in tuition and quota in the coming school year, and this will boost FY23 outlook. It opts for an Rmb500m buyback, instead of paying interim dividend.

• Lasertec’s 3Q disappointed as revenue of ¥16.6bn materially undershoot consensus estimates of ¥26.6bn but given quarterly volatility in deliveries and acceptances that is understandable. 
• What is more concerning is the emerging picture of gross margin decline which the company had previously warned about. 
• Given inflated valuations these small negatives together with no guidance raise could drive a continued correction.

• Caixin reported on Wednesday that Meituan (3690 HK) has shut down community-group service (Meituan Select) in Beijing following news that the company plans to shut down operations in loss-making cities.
• Community-Group buying (CGB) became popular in China in 2020 and Meituan entered the market in 3Q2020 and continues to spend heavily on the biz.
• The market became heavily competitive in the form of price war, which attracted regulatory scrutiny and led to large players like Alibaba and JD.com opting out of the market.

• The recent surge in IC test equipment orders is unsustainable. Only service orders maintain a positive trend.
• After peaking this fiscal year, sales and profits are likely to show double-digit declines. When earnings might hit bottom is not clear, but cyclical gearing is high. 
• Earnings could rebound in 2 or 3 years, but visibility is poor. Don’t forget that Advantest has dropped into the red three times in the past 20 years. 

• PPI has begun roll out of new, specialty food stores designed to slot into a variety of shopping malls. 
• On the surface, these stores look like mini-Don Quijote stores, emphasising low prices and a dazzling density of product, but focused on sweets, liquor, cosmetics, or a combination.
• Expansion will help reach new customers, reduce the expense of opening new stores, and help with building scale for private brands. 

• Clinuvel Pharmaceuticals (CUV AU) has sole marketed drug, Scenesse, approved in the U.S. and Europe for the treatment of a rare skin disorder that causes extreme sensitivity to light.
• Scenesse revenue jumped 65% y/y in H1FY22, due to increasing patient demand. With the re-opening of expert centers, treatment has largely normalized in Europe.
• Clinuvel has rich pipeline, to develop pharmaceutical products to treat a range of indications and non-prescription healthcare solutions to individuals in the wider population.

• Inline quarter, though margins continue to decline on market share loss and ramping new nodes. 
• Intel is overly optimistic about PCs rebounding in the 2H; 2021’s 15% growth is not sustainable.
• Intel maintained its full year revenue guidance and increased its EPS despite lowering 2Q’s guidance. This implies an acceleration in the back half. We find that overly optimistic

• Brazil’s consumer credit quality trends to February deteriorated further relative to the previous month, despite corporate credit quality improving marginally
• System loan growth was 16.6% for the twelve months to February which was slightly faster than the YoY rate for January (16.4%), totally due to the stronger consumer loan growth
• The BCB is in the latter stages of its benchmark rate hiking cycle, which impacts credit quality, especially in consumer categories; still, Brazilian banks should benefit from higher loan spreads

• Mexico continues to be the key contributor to BBVA group, with the offer for Garanti minorities set to increase BBVA’s share of higher risk higher reward returns from emerging markets
• The revised offer to Garanti minorities is still 10%+ cheaper in Euro terms than at the time of its 4Q21 announcement, with a modest hit of 34bps to CET1 ratio
• We see BBVA as an attractive value play in select emerging markets and Spain, with its well-established digital offerings as a driver for sustained premium returns and premium capital distribution

• Astra International 1Q2022 numbers reflect its prime positioning as a beneficiary of recovering domestic growth in Indonesia and its exposure to the commodities boom through United Tractors (UNTR IJ).
• It has increased market share in autos through Toyota and Daihatsu plus holds a strong position in providing auto, motorcycle, and heavy equipment financing providing further geared exposure. 
• Astra International has a war chest from the sale of Bank Permata which is yet to be deployed but could be in the digital space as a future potential catalyst.

For our next Corporate Webinar, we are glad to welcome Taste Gourmet Group (8371 HK) CFO and Company Secretary, Gerald Yu. In the upcoming webinar, Gerald will share a short company presentation with on-the-ground insights from Hong Kong, after which he will engage in a fireside chat with Smartkarma Analyst Sameer Taneja. A live Q&A session will follow.

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

Taste Gourmet Group Limited is a Hong Kong-based restaurant group offering a variety of cuisines, under a portfolio of brands, to a diversified customer base. Since the opening of its first restaurant in 2007, the group has owned and operated a total of 34 restaurants offering Vietnamese, Japanese, Chinese, Western, and Drink under 14 brands, including 11 self-owned brands such as La’taste Vietnamese Cuisine, Dab-Pa Peking & Szechuan Cuisine, Dab-Pa Peking & Szechuan Bistro, Dab-pa Modern Chinese Cuisine, Urawa Japanese Restaurant, Nabe Urawa, Rakuraku Ramen, Wasyohuya Yamaichi, Moments Together, Yakiniku Guu, San-Kinn, three licensed brands known as Parkview, Takano Ramen, and Tirpse, and one joint venture brand known as Xianghui.

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.

• Arwana Citramulia (ARNA IJ) released a strong set of 1Q2022 surpassing expectations and paving the way for strong growth in 2022 driven by an improving product mix.
• ASPs for Arwana are increasing through changing product mix, which is improving margins but not suppressing demand with a move to higher-end Digi Uno and ARNA products. 
• A webinar with management confirmed the positive outlook for 2022, with an estimate of +30% bottom-line growth forecast from increased volumes, greater efficiencies, and higher ASPs through improved product mix.

• Bank Negara Indonesia (BBNI IJ) released a solid set of 1Q2022 results, with new loan bookings improving to pre-pandemic levels, strong non-interest income, and improving credit costs.
• The bank continues to pursue a multi-pronged digital strategy, with strong growth in mobile banking which now surpasses ATMs on transactions plus the launch of Bank Mayora digital bank.
• Bank Negara Indonesia (BBNI IJ) has already seen some upward re-rating since the last results but this can continue as its digital strategy bites and loan growth and NIMs improve.

• Channel checks with Merida Industry (9914 TT) and Giant Manufacturing (9921 TT) on the Asia order book provide color on Shimano’s results so far. 
• Channel checks with the Dutch Accell Group (ACCEL NA) also do not show any encouraging data either. 
• Share buyback will provide short term relief but it won’t make revenue growth rate to be as high as early 2021. 

• Oriental Land (4661 JP) fell more than 10% today after a strong earnings beat in 4QFY22, which saw revenue and OP beat consensus by ¥7.0bn and ¥8.6bn respectively.
• The medium-term outlook is very disappointing with the company expecting no pricing growth and low park attendance.
• After moving up nonsensically during COVID due to extremely inflated medium-term consensus, we think Oriental Land’s share price could start falling apart after this medium-term plan announcement.

• HKEX (388 HK) core businesses such as cash market and stock connect remain robust against the backdrop of relatively low expectation.
• Mark-To-Market investment loss underscored the volatile fixed income market, we expect the negative impact will continue into 2Q22 as the shift in rate environment.
• MSCI China A50 future continues its rapid ramp-up, ADV is up 86% quarter-over-quarter. Overall future trading is strong, ADV is up 39% quarter-over-quarter.

• FY22 EBITDA guidance is disappointing as strategic investments accelerate yet again and leaving investors uncertain on whether previous guidance for FY23 can be met
• We think ZHD’s FY23 target of ¥ 390bn in EBITDA is reachable but a meaningful beat, which is factored into consensus, is less likely
• So FY22 is another transition year but without the excitement on the potential for LINE as an alternative theme. It is better to be on the sidelines. 

• AKR Corporindo (AKRA IJ) results continued to reflect its key exposure to both economic recovery in Indonesia and its exposure to rising commodity prices through its chemical distribution.
• Volume growth in petroleum distribution may surprise on the upside, whilst chemical prices remain elevated boosting that business.
• The pipeline for its JIIPE industrial estate looks promising and management remains confident in targeting 40 ha land sales with potential upside from Freeport Smelter related demand. 

• Solid earnings call heightened our conviction in Facebook as a terrific long for the next year.
• Reels monetization headwind will become a tailwind… just a question of when. TikTok threat is real, but Facebook knows how to clone other’s innovations.
• Apple IDFA issues not worsening, Facebook will figure this out eventually.

• Renesas’ 1Q numbers blew away guidance and consensus as revenue beat by 3.4% and adjusted OP beat by 16%. 
• Revenue growth was strong for both Auto and Industrial with Industrial margins also improving noticeably vs. last Q. 
• Renesas also announced a rather large buyback which is effectively a repurchase of the INCJ’s stake.

• Another quarter another Keyence beat as revenue beat by 5.3% and OP beat by a more modest 4.7% due to high SG&A costs. 
• Sell side analysts on the conference call remain confused by the outperformance vs. peers because they fail to realise that Keyence gonna Keyence. 
• Despite this strength we remain cautious as Keyence is now a truly exceptional company that is being priced like a magical one.

• HCM reported FY revenue of ¥1,025bn, just above our ¥1,010bn estimate and blowing away clueless consensus’ ¥963bn. 
• OP was ¥93.5bn despite the trouble in Ukraine/Russia, just below our ¥95bn estimate and significantly above consensus at ¥86.8bn and guidance of ¥84bn. 
• Guidance for a YoY OP decline is silly in our view and we suspect there will be a double digit increase.

• Ownership in Tesla hits record levels among Global managers. Of the 371 Global equity funds in our analysis, a record 15.1% now have exposure to the stock.
• GARP managers are the most aggressively allocated, with a 0.42% holding on average, though the larger individual positions are held by Growth and Aggressive Growth strategies.
• Despite this record, Tesla remains under-owned by Global active managers compared to large cap peers, and is the second largest underweight in the World

• Results for Q4 and FY22 guidance were mixed with platform sales and revenue largely in-line but margins slightly weaker
• The loss of a major B2B customer wipes out almost all the growth in that segment but core consumer growth remains solid (10%+) as do operating KPIs 
• The read across to parent Z Holdings is limited as the difference in company guidance and consensus operating profit is less than 1% of ZHD consolidated

• Shin-Etsu results were mostly in-line with revenue beating by 5% and OP both within 1% of consensus and just a touch above guidance.
• OP was about 6% weaker than our estimate however driven by the Electronic Materials business. 
• The lack of guidance may worry some investors but trends look positive enough that results should end up materially above consensus.

• Zozo reported yesterday missing slightly across the board with OP missing consensus by 6.7% on a 0.7% miss at the top line. 
• GMV was reasonable due to apparent generosity on reward points and strong promotional spending. 
• OP guidance of ¥51.5bn was noticeably below consensus and while Zozo is considered conservative we expect a miss and long-term stagnation.

• Xinjiang Goldwind Science & Technology (2208 HK) sees recent recovery in WTG price to be positive; and the increase in average unit size should be good to unit costs.
• Gross margin contracted 3.1pp YoY in 1Q22 and it has put in place many cost reduction initiatives to contain cost inflation. It expects more impacts can be realised in 2H22.
• External order backlog up 6.3% YoY to 16.97GW, with an encouraging 37.7% growth for overseas contracts. We think its 9.9x FY22F PER is inexpensive relative to the clean energy plays.

• Asahi Group Holdings (2502 JP) announced yesterday that it will raise the prices of a majority of its domestic beverage brands to pass the rising cost of raw materials to customers.
• Although beers as a whole has a relatively inelastic demand, the price elasticity in different categories of beer varies quite a bit with high malt beers having highly elastic demand.
• We think the price hike could be more detrimental to Asahi than its competitors as the company generates most of its domestic revenue from the price-sensitive high malt beer segment.

• Advantest results were relatively uneventful with a marginal beat at the top line and a marginal miss at the OP level. 
• Guidance was decent however with both revenue and OP above consensus and some lowballing on margins suggesting some upside to guidance. 
• The company also said that it would no longer disclose orders because changing lead times made them less comparable because of course they do…

• This insight focuses on private unicorns backed by Sea Ltd (SE US) , Walmart (WMT US) , Softbank Group (9984 JP) & Prosus NV (PROSY US) 
• Growth would require new and even larger investments across the Internet Sector.  
• Reliance and Tata’s retail plans are likely to challenge even giants like Amazon and Flipkart.

• Koei Tecmo’s earnings yesterday were on the strong side with 4Q OP beating by 28.7% despite a 1.79% miss at the top line. 
• Thus, the typical pattern of heavy expensing of development costs in 4Q was missing and combined with some one offs could make hurdles for next year high. 
• With the stock struggling to gain positive momentum and few clear positive catalysts on the horizon we remain negative.

• Machine tool orders are losing momentum given the geopolitical risks and shortage of materials
• Margins are also order pressure given soaring materials and transportation costs
• FY3/23 OP guidance misses consensus, but it is not conservative. We expect the share price to head lower

• FY Mar-22 sales and profits exceeded guidance, as expected. New orders declined slightly in 4Q but remained above sales.
• Unfortunately, Disco has decided to stop disclosing orders and the order backlog. A cynic would say this signals the peak of the cycle. 
• 1Q guidance looks conservative. That should be no surprise and no catalyst for the stock price. Shipments of blade dicers are forecast to decline by 10%. Beware. 

• The company reports Thursday and markets have priced in bad news (shares down 22% YTD and 38% from November highs) but that pattern of weakness in year-end results isn’t new
• It has happened the last four years as management’s penchant for investment dampens hopes for profitability growth but LINE synergies and digitization should enable double-digit EBITDA growth anyway
• We are posting updated company forecasts/estimates including a separate table for PayPay

• Omron’s 4Q results continued the trend of weakness in the FA sector and guidance was tepid unlike Yaskawa. 
• In particular, the Healthcare Segment’s margins appear to be normalising and poses a downside risk along with typical cyclicality. 
• At 14x EV/OP on guidance vs. a 10x multiple that we would consider fair, there is downside risk here.

• Despite a dead cat bounce in Robomachine coming through as we suggested Fanuc’s 4Q OP missed consensus estimates by 14%. 
• Guidance was strong however with revenue guidance of ¥825.5bn materially above consensus’ ¥797.7bn. 
• This continues a pattern of weak results and strong guidance in the FA sector going into a tightening cycle which is concerning.

• Workman sees an opportunity to disrupt the footwear market by creating Japan’s first national low price chain, with a strong focus on women’s shoes.
• It launched the first store this month with prices as low as ¥680 and expects to have 200 stores in the near future.
• The Japanese footwear market is ripe for disruption as Abc Mart Inc (2670 JP) diversifies and Chiyoda Co Ltd (8185 JP) and Gfoot Co Ltd (2686 JP) struggle to maintain momentum.

• With the Carlyle Group taking a 10% stake in Hyundai Glovis, we believe there could be increasing pressures including through higher dividends and buybacks to return capital to shareholders.
• Hyundai Glovis is likely to get re-rated going forward, driven by profitable expansion into LNG and hydrogen transport, online used car sales platform, and more favorable shareholder return policies.
• Hyundai Glovis’ recent contract with Tesla to ship cars out of China is another positive sign on the growing importance of Hyundai Glovis in the Asian vehicles shipping market.

• Ryman Healthcare (RYM NZ) is expected to see pent-up demand, with the gradual re-opening of New Zealand. Long-term demand environment is expected to be positive, due to favorable macro tailwind.
• However, the company is facing regulatory risk. One of its sites in Australia has ongoing litigation risk. Possibility of renewed COVID-19-related restrictions can not be overruled.
• While Ryman has long-term growth engines, these overhangs may limit the near-term upside potential of Ryman shares.