Equity Bottom-Up

• The relaxing of restrictions by Hong Kong makes Taste Gourmet Group Ltd (8371 HK) a great reopening play, trading at 8.8x FY22e and 5.6x FY23e. 
• Despite a challenging environment, the company has executed well, maintaining net margins north of 7-8%, which are far superior to other listed competitors.
• With >60% payout ratios, it trades at a dividend yield of 6.7%/11.4% FY22e/FY23e. Since 29% of the market capitalization is cash, we are confident in the dividend payments. 

• Beauty services in Hong Kong will pick up from the 21st of April 2022 post the reopening, due to pent-up demand and the disbursement of Consumption Vouchers by the government. 
• Despite losing three months of H1 2022 and a month of H2 2022, we believe that Water Oasis (1161 HK)  is still trading at 5.4x PE FY22e.
• With an 80% payout ratio, the dividend yield is alluring at 16.4%. Net cash represents 38% of market capitalization. A year of uninterrupted operations implies a 3.8x PE. 

• China’s gaming regulator, National Press and Publication Administration granted publication licenses to a list of 45 games, ending the nine-month long freeze on new game approvals in the country.
• While it comes as a relief, The Cyberspace Administration of China has kicked off a formal campaign to investigate and rectify algorithm security issues of tech companies.
• Though any of Tencent (700 HK) games didn’t receive approvals, the company’s shares have moved positively during today’s trade and up 2.1% from yesterday’s close.

• As of February, TEL expected the global wafer fab equipment market to grow by nearly 20% in calendar 2022. This seems increasingly unlikely.
• Japanese data shows equipment demand leveling off while the economic situation deteriorates and semiconductor capacity expansion projects are delayed.
• The shares have dropped 22% since the beginning of January and are now selling at 20x management’s EPS guidance for FY Mar-22. Not cheap in historical terms.

• Sony and LEGO’s investment in Epic comes shortly after the official release of Unreal Engine 5 which promises to significantly improve efficiency for game designers and visual effects artists. 
• We had predicted that Sony and Epic would continue to drift closer and would eventually dominate the metaverse and this does nothing to change that view.
• We discuss below the impact on some popular metaverse plays which investors seem to fail to realise are only metaverse plays because they can be shorted.

• Launched 30 new SKUs during COVID-19 in multiple areas of health that can transform the company from herbal remedies into a bigger conglomerate of health providers. 
• PE firm that backed SIDO in the earlier years reduced its holdings but it should not be seen as a vote of negative confidence in the company. 
• Sido Muncul (SIDO IJ) can be compared to Blackmores Ltd (BKL AU) which has a wide range of health products but trades at a 100% premium to SIDO. 

• The fourth quarter was again a disappointing one for Lawson Inc (2651 JP) with operating income falling short of consensus by 14.6%.
• The next year’s OP guidance of ¥53.0bn (12.5% YoY) is around ¥10.0bn below the pre-COVID level, but Lawson’s lower profitability could be due to heavy upfront investments.
• Further out, there is substantial upside to Lawson’s profitability and consensus could be unjustly penalizing Lawson’s growth investments by valuing the company at a discounted FY+2 OP multiple.

• Goldwin Inc (8111 JP) has risen to hold a leading share in outdoor wear retailing on the back of the success of The North Face.
• It has developed considerable retail and marketing skills in the process and is now applying these to its own brand with hopes of going global.
• Demand for new forms of sports and outdoor brand remain strong in Japan and globally and Goldwin’s mix of technical fabrics and quality could give it an edge.

• A first look at the merger suggests that the value proposition is tilted towards HDFC Ltd (“HDFC”) vs HDFC Bank (“HDFCB”), given the declining regulatory arbitrage between large-NBFCs and banks
• However, given HDFCB’s intense focus on growing its distribution prowess, HDFCB stands to benefit immensely from the merger and is thus a win-win deal.
• With the expanded distribution network and cross-sell synergies, HDFCB, despite the larger base, will benefit from an accelerated growth post-merger.

• The 1Q22 revenue is NTD$63.4bn, and we estimate GM is ~40%, which is consistent with 1Q22 guidance.
• We estimate the order is pretty much confirmed in UMC in 3Q22, which should be ~NTD$65bn.
• UMC will increase about 10-15k/month of 28nm capacity in 2H22.

• China announced game approval last night, after 8 months of silence.
• We discussed in our previous note that China would resume game approval.
• There is no game approved for Tencent and Netease this round but we believe their approval will come in due time.

• HHC updated its NAV to $170 a share from $150 a share last year after the return of retail and the Las Vegas Ballpark to normal operation.
• HHC has started to redeploy its free cash flow with $250 million portion dedicated to share repurchases. 
• The improvements in the business we have cited over the past year contributed to HHC raising its NAV estimate

• Following CCEP spin-off and share price decline, China Conch Venture (586 HK) is now at more attractive valuations relative to the stub, on sum-of-the-parts and on PER multiple. 
• Growth profile should improve in next two years and it has an optimistic expectation of of 76% increase in waste treatment and 79% growth in on-grid electricity for FY22.
• New business initiatives including anode and cathode materials of lithium iron phosphate and lithium batteries and used lithium batteries treatment may provide potential medium term upside.

• The three large orders for COVID-19 small molecule drugs are mostly one-off revenues, and after 2022, Asymchem Laboratories (6821 HK)‘s performance could decline from a high base.
• In essence, Asymchem mainly relies on cost advantage of large-scale capacity to obtain orders.Without core leading technology in frontier of medicine, Asymchem is difficult to enjoy sustainable industry development dividend.
• Overall, Asymchem’s moat is not strong enough, and the certainty of the Company’s long-term performance growth is also not high. It could be a short-term trade rather than long-term hold.

• In the first quarter, automakers have been back to stops and starts with segments of their production runs due to parts availability
• GTX’s product mix makes the Company vulnerable to the ongoing supply chain issues arising from the war in Ukraine
• In March 2022 there was a 7.2 magnitude earthquake in Japan that resulted in power loss and infrastructure damages

• Simcere Pharmaceutical Group (2096 HK) reported an 11% y/y revenue growth to RMB5 billion, mainly driven by 54% y/y revenue growth from innovative pharmaceuticals.
• However, gross margin contracted 160 basis point to 78.4%, reflecting pricing headwind. Heavy R&D and selling and distribution expenses are taking toll on operating profit.
• During 2021, Simcere has added six registered clinical trials for phase 3, two trails for phase 2, three trails for phase 1, and obtained 12 clinical trial approvals for drugs.

• We are bearish on Fanuc. Yaskawa’s robotics orders were strong but Fanuc is more correlated with machine tool orders
• Machine Tool orders have already turned south and Fanuc is losing momentum in its order growth
• If we are right on the cycle, we expect Fanuc to trade down to 2.3x book value, 20% downside risk from here

• Due to its early involvement in license-in mode, Zai Lab could in-license many high-quality candidates at a low price in the early stage, thus leading to today’s achievements.
• However, the increasingly low cost performance of in-licensed products has made the capital “reconsider”, because it is increasingly difficult to maintain high growth as before based on license-in mode.
• Zai Lab could be a good short-term trade,especially when it reaches licensing deals or launch new products,but doubts about long-term prospects could discourages investors from holding it for long term.

• Shakey’s Pizza Asia Ventures (PIZZA PM) is a play on F&B normalizing in the Philippines.  On our numbers, it trades at a 12.9x PE for FY22 and 10x for FY23.
• Quick Service Restaurant (QSR) peers like Domino’s Pizza (DPZ US) and Jubilant Foodworks (JUBI IN) trade at multiples of 39x and 59x fwd PE, making Shakey’s an extremely cheap stock. 
• Versus the current multiple of 7.9 peso/share, we believe the stock can trade up to 30x PE FY23 implying a 24 peso/share price (200% upside).

• Hansoh Pharmaceutical (3692 HK) is increasingly focusing on innovative drug, with revenue from such drugs contributing 42% of total revenue in 2021. R&D accounted for 18% of revenue in 2021.
• Thus far, in this year, Hansoh received approval for one more new rare-disease drug. Its rich pipeline has 25+ clinical programs of innovative drugs.
• With its proven execution on innovative portfolio, sound financial positions, and recent business collaboration effort to enrich the pipeline, Hansoh seems to be an undervalued business.

• Crowdstrikes’ growing platform offers three end markets as large as its core endpoint protection: log management, identity, and IT hygiene.
• 43 public enterprise software companies with more >$1 billion in revenues, only 5 are growing >60%, and only one has 30%+ free cash flow margins: Crowdstrike.  
• New $5B ARR 2026 target will prove as ridiculously conservative as last year’s $3B ARR 2025 target.

• We expect TSMC will grow ~4.7% QoQ in 2Q22, and the revenue/GM/OPG is around US$17.7bn/55.1%/43.8%.
• We highlighted TSMC was considering to increase the wafer price nearly 2 months ago, but TSMC has still not made the final decision yet.  
• TSMC 4/5nm capacity will be ready for for 150k/month within 4Q22. We think the new iPhone 14 would request more than half of the capacity.

• The Philippines’ largest full-service Pizza chain, Shakey’s Pizza Asia Ventures (PIZZA PM) is currently trading at PHP 7.60, 7.3% below its April 2022 follow-on offer price of PHP 8.20.
• With the ending of COVID restrictions, we expect the company’s financial performance to improve drastically over the next few quarters.
• This should alter the trajectory of Shakey’s to aggressively take back the share price towards the pre-COVID level.  

• Yaskawa reported weak results as we expected (¥12.9bn OP vs. our ~¥14bn estimate and consensus at ¥16.7bn). 
• Despite this the company actually guided for a very punchy ¥72bn in OP next FY even above consensus’ ¥65.5bn and our expectation for OP to be flattish or even decline. 
• Nevertheless, there was nothing on the earnings call to suggest that guidance was anything more than overoptimism on the top line.

• Fortescue Metals (FMG AU) has an improving yield outlook, as iron ore prices are rising due to a shortage of iron ore, with supplies from Russia and Ukraine being affected.
• We expect the company to pay a 2.3 AUD/share dividend based on a 70% payout ratio, implying an 11% dividend yield. The company has low net gearing at 10%.
• Upsides could emerge from China stimulating its economy to counter the lockdowns and measures taken to improve their property market which will in turn boost steel production. 

• Indonesia’s leading steel pipe company PT SPINDO published FY21 results earlier this week, crystallizing a year of record profitability with EBITDA doubling and NPAT increasing 2.8x.
• The heightened profitability is attributable to a combination of high steel prices making room for wider margins (in both percentage and absolute terms) combined with an improving product mix and unwavering demand landscape.
• We note that EPS of just IDR 5.6 in 4Q21 was well below the 9M21 run rate of IDR 62.0 and was due to several unexpected one-time expenses and provisioning for a possible tax expense

• By many standard measures, Melco Resorts & Entertainment shares appear to be either fully or overvalued even at its pandemic beaten down price of $US6.94.
• A discounted cash flow analysis revealed a negative -US($1.18) intrinsic value. But the calculation is based on assumed path of pandemic too difficult to predict accurately.
• The company had a pre-pandemic  Macau market share of over 16%. It is among the leaders in Manila’s entertainment zone, and expects its Cyprus property to open by Dec. 2022

• Berli Jucker (BJC TB) 4Q2021 results marked a turnaround in both its packaging business in glass and cans plus better performance from Big C as mobility improved during the quarter.
• The outlook for packaging looks positive and the Big C will open more outlets in 2022 plus renovating around 20 hypermarkets plus opening new formats this year.
• Berli Jucker (BJC TB) remains an interesting recovery play for Thailand and Vietnam, with the potential for more retail exposure there in the future. Valuations stack up versus peers.

• The bailout of Chinese billionaire’s nickel short position has received overwhelm backlash over LME’s credibility and China’s interference on global market. Nickel future trading continued to be choppy. 
• HKEX (388 HK) first 3-month average daily turnover is down 35% year-over-year due to pandemic outbreak in HK and lower IPO activities, but March trading activities have rebounded from February. 
• HKEx revealed New Digital Assets Marketplace “Diamond” in its corporate day in March, which will feature atomic settlement, multi-asset trading, use of Smart Contracts and cloud-based infrastructure.

• BNC Korea (256840 KS), with its partnered COVID-19 pill will be a late entrant in the space, as two more COVID-19 pills are already approved in South Korea.
• The company reported operating loss of KRW11 billion in 2021 and 99% of its export comes from Russia and CIS countries.
• Since my bearish note published on the company in October 2021, shares have declined 50%. I am still not upbeat on the growth prospect of the company.

• Global Cord Blood (CO US) is facing regulatory and business environment uncertainty. China has not released any update on the new licenses of the country’s new cord blood bank.
• The company is seeing slower than expected business recovery and new subscriber addition is decelerating since Q1 FY22, mainly due to COVID-related restrictions.  
• China’s birth rate dropped to a record low in 2021, thereby indicating sluggishness in the total addressable market of Global Cord.

• Caixin confirmed today that Arm had transferred its shares in its China JV to a special purpose vehicle which it owns together with Softbank, as the FT had initially flagged. 
• This could technically eliminate the obstacles to an audit for an IPO but we believe regulators would be remiss in allowing such a flimsy change to pass muster. 
• In addition, the move reeks of desperation for cash and Softbank’s typical disregard for prudence and the importance of due diligence to investors.

• JD dismissed employees in many businesses, such as Retail, International, and Jingxi.
• However, we believe the layoff only covers minor businesses and functions.
• We believe the stock still has a upside of 48%.

• Even though the results weren’t a blowout as we expected, today’s price performance suggests that Seven & I Holdings (3382 JP) has not disappointed the market.
• We think Seven & I could be playing safe by holding back Speedway synergies.
• After a short breather, share price momentum has shifted positive and we expect this to continue alongside upgrades to Speedway synergy estimates.

• Softbank Corp (9434 JP) shares have underperformed telco peers that benefit from a risk-off environment despite a sector-high dividend payout as 38% of value comes from Internet and fintech
• That dividend payout looks safe across our forecast period though as the telco business provides sufficient free cash and parent Softbank Group (9984 JP) can always use more cash
• At Q3, management reiterated confidence in financial guidance through FY22 and a positive Z Holdings (4689 JP) Q4 report could help shares make up lost ground 

• The new four-year medium-term strategy that lays out a realistic route to greater profitability and growth.
• The stock has been trading below book value for years
• Buying back 10% of outstanding shares will give investors confidence 

• This model uncovers companies facing recent sharp cuts in estimates. These shorts can have very disparate characteristics.
• The key judgement involves whether the negative revisions are temporary or if they are indications of ongoing weakness in the business. 
• Breaking Estimates stocks often continue to decline after the cuts.  This week we flag: UiPath, EchoStar, Stitch Fix, First Solar

• HOOD’s performance indicators are deteriorating.  Growth in funded accounts is not growing.  Monthly average users are declining, and ARPU is falling.  Margins remain negative and are declining.
• The company’s main sources of revenue are from transactions in speculative instruments.  Options and crypto trading represent 80% of transaction revenue… in accounts that average $4,300 in size.
• Small scale and lack of diversification leave it disadvantaged.   Further, it generates little fee income, such as asset management fees.  It is nearly entirely reliant on payment for order flow.

• We think the recent price weakness of Dongfang Electric (1072 HK) is overdone, and there is strong value proposition on the stock based on its current multiples.
• DEC’s orderbook has well covered in the next two years, while we see cost management measures will help mitigating the pressure on margin. 
• It is well positioned to capture the wind power boom (26% of FY21 revenue) and remains the prime beneficiary of China’s hydrogen economy and pumped storage demand in the longer-term.

• OneConnect Financial Technology (OCFT US) is a leading technology-as-a-service provider for financial services industry in China.
• The company is currently listed in the US and recently filed for a secondary listing in Hong Kong in an attempt to boost the liquidity of its shares.
• OCFT still relies on its parent Ping An to generate most of its revenues and despite seeing strong growth in top line, the company is still far from profits.

• Yaskawa reports today and we expect earnings and guidance to both be on the weak side. 
• The stock has been weak of late but we still lean towards the idea that there is a little downside risk remaining. 
• The key question is whether the market attaches any credibility to consensus projections of 15% YoY OP growth next FY.

• Takeda Pharmaceutical (4502 JP) has been aggressively expanding its rare disease portfolio following recent hiccups in its development pipeline through Tie-Ups with different gene therapy developers.
• Rare diseases biz is the second largest business segment for Takeda generating about 17.1% of total revenues for the company.
• Takeda’s share price started plunging after suspending a phase 2 study of TAK-994 in October 2021 and price started moving up since January and we think there is further upside.

• Indonesia’s leading UHT milk and carton tea producer Ultrajaya Milk Industry booked a strong set of FY2021 results, with a convincing recovery in 4Q2021, which should carry through into FY2022. 
• The company continues to increase raw milk sourcing locally, which will alleviate rising global prices, and it is expanding its distribution network and new products to drive demand. 
• Ultrajaya is a market leader in its main product categories, yet trades at half the valuation of recently listed Cisarua Mountain Dairy, which looks excessive with potential upside to valuation.

• Last week, MINISO Group Holdings (MNSO US) filed an application to conduct a follow-on public offering of ordinary shares on the main board of the Hong Kong Stock Exchange.
• The Hong Kong listing will be treated as a second primary listing, resulting in a substantial improvement in the stock’s liquidity.
• With the improvement in liquidity following the Hong Kong offer, there could be a significant upside to Miniso shares in the short term.

• The revenue YoY growth, net profit YoY growth and net profit margin reached a new low in 2021. The performance of Medlive cannot meet the market’s expectations of high growth.
• The medical knowledge solutions is the cornerstone business and vital to the attractiveness of platform for users. However, this business is not strong enough to make the outlook certain.
• In the fierce competition, more efforts are needed on how to convert physician resources into business value continuously. Due to unreliable logic, we are conservative about Medlive at current stage.

• We maintain our BUY rating with a new DCF-derived TP of Bt259 (-4% from previous TP) representing 23.8xPE’22. We adjusted down overly optimistic forecast on non-mobile enterprise segment. Nevertheless
• We expect 1Q22E net profit at Bt6.9bn (+4% YoY, flat QoQ). Limited QoQ growth is due to prolonged price wars and weaker foot traffic caused by the Omicron outbreak.
• We expect CCIID and 5G ARPU uplift will drive earnings growth at 9%CAGR between 2021-24E.

• Since Elon Musk bought his 9.2% stake in Twitter, the stock is up 30%
• We are doubtful Musk can alter the trajectory of Twitter’s slow product development and weak monetization of direct response advertising and SMB customers.  
• Twitter trades 6.5x forward sales / 61x forward earnings / 28x forward EV/EBITDA while Facebook trades 4.5x / 19x / 10x those same metrics…essentially 1/3rd the valuation on earnings.

• Medlive’s shares are currently trading at HK$8.15 per share and lost almost 70% YTD which we think was due to the ongoing regulatory crackdown on tech platforms in China.
• Medlive’s 2021 revenues grew 33.2% YoY to RMB284m while adjusted OP grew 19.0% YoY to RMB123m. Shares reacted negatively due to slowdown in top line growth.
• Medlive is currently trading at FY2 EV/Revenue of 0.97x compared to 34.3x when we last wrote. We think shares are extremely cheap and offers a good entry point.

• Tsingshan metals has reached an agreement with bankers on nickel trade
• There is risk of significant impairments at STAN and other counter-party banks
• This comes at a time when STAN’s impairment costs are starting off at a low level

• All of the Hon Hai’s 4 product-lines were growing double digits in March. 
• In 1Q22, Hon Hai’s revenue was NT$1,408.2bn, which was -25.5% QoQ and 4.83% YoY respectively. The 1Q22 revenue was a bit better than the original expectation.
• Although Hon Hai is confident, we think the visibility is still a bit of ambiguous in 2Q22.

• China Longyuan Power Group Corp (916 HK) is expected to see an exciting year on the back of faster capacity growth, increase in utilisation hours and higher average tariff.
• Potential asset injection from its parent CHN Energy remains a wild card. It may grow its capacity by an average of 30% over the next three years if materialises.
• Lower funding costs and the return to A-share are positive to Longyuan’s expansion. We think consensus forecasts for next 2 years are too low and represent potential upside surprises.

• Honda and GM announced today that they would further expand their partnership on EV technologies.
• A new EV series will be produced for North America by 2027 and the two companies will collaborate on advanced battery technologies.
• This is an incremental positive for Honda and GM but the array of partnerships Honda is creating points to a lack of decisiveness on its part.

• The 2021 performance of JD Health (6618 HK) beat market expectation. The scale of annual active users, commodity SKU, warehouse, logistics, medical resources, etc. all had breakthroughs.
• The growth rate and gross margin of service revenue were higher than that of product revenue. So, the performance of service sector can better determine JD Health’s future outlook.
• The outlook of online healthcare service is uncertain.Whether successful or not, JD Health still has other businesses to support future development, and is therefore our top pick in this sector.

• Indonesia’s reopening has happened for some time but Jasa Marga (Persero) (JSMR IJ) share price has not moved much. 
• On-The-Ground sources told that the traffic is back, especially in Jakarta where Jasa Marga has the most toll roads. 
• Pre-COVID it was trading at 2-3x PBR and now it’s only 1.35x PBR, premium to Bluebird but has a bigger market capitalization that makes JSMR more investable. 

• Ebos Group Ltd (EBO NZ)’s proposed acquisition of LifeHealthcare has been cleared by Australian Competition Commission, paving the timely closure of the transaction by the end of FY22.
• EBOS has achieved another record result in H1FY22, headlined by double digit revenue and earnings growth, due to continued strong growth trajectory of both healthcare and animal care segments.
• EBOS shares gained 5% since I published bullish insight on December 16. I am still optimistic on the long-term growth prospect of the company.

• The company sells software tools that that allow businesses to automate cloud infrastructure
• Next gen VMware… onboarding technology for cloud transitions. Impressive parallel.
• Terraform and Vault are 85% of revenues today, but big TAM for the future.

• Vision Fund’s public portfolio dropped $18.6bn (-24%) in Q4. China concerns grabbed headlines but it was Asian names (Coupang, Grab) that drove losses
• Public investments held at the parent level fell 41% (-$1.3bn), led by SoFi (-$862mn), Lemonade (-$189mn) and THG (-$147mn) 
• We expect that Softbank will also need to write down private investments although it is not clear just how far private valuations have tracked public changes

• After raising full-year guidance in 3QFY22 due to stronger than expected performance in the overseas business, Seven & I is scheduled to release the fourth-quarter results on 7th April 2022.
• Domestic performance has been relatively stable, but 7-Eleven Inc should outperform expectations in the US through the yen depreciation and rising fuel retail margins.
• Thus, we would buy Seven & I Holdings (3382 JP) leading up to earnings expecting substantial upside on a potentially large earnings beat.

• The shares have rebounded by nearly 30% since the 1st of February. Consolidation seems likely while waiting for evidence that management’s sales and profit targets can be met.
• As Japan’s No. 1 IT services company, Fujitsu should benefit from the ongoing digitalization of Japan’s public and private sectors, the roll-out of 5G and the development of 6G.
• Risks for investors include the weakening yen and economic slowdown. A history of IT system failures also raises a red flag.

• The YoY growth rate of product revenue accelerated in 2H21, compared to 1H21.
• In China, many cities are locked down; therefore, we believe people need online medical shopping.
• However, the stock is overvalued compared with other online and offline medical stores.

For our next Corporate Webinar we are glad to welcome Southern Alliance Mining Ltd (SAML SP) CFO, Lim Wei Hung. In the upcoming webinar, Wei Hung will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 12 April 2022, 17:00 SGT.

Southern Alliance Mining Ltd. is an established producer of high-grade iron ore products in Malaysia. It listed on the Catalist board of Singapore Exchange on 26 June 2020 (SGX:QNS). Headquartered in Pahang, Malaysia, the Group is principally involved in the exploration, mining, and processing of iron ore for subsequent sale. The Group sells (i) iron ore concentrate of low level of impurities with total Fe grade of between 62% to 65%, to steel mills and trading companies mainly located in Malaysia and China; and (ii) pipe coating materials that are crushed iron ore with a natural characteristic of a higher density for subsea pipes.

The Group’s primary mining asset, the Chaah Mine, is an open mine pit consisting of two mining leases and covering an aggregate area of 225.7 hectares. In addition to the Chaah Mine, the Group has also been granted the right to carry out exploration and mining operations at three potential iron ore mines located in Johor, Malaysia (“Exploration Assets”). The Group has commenced exploration activities since February 2022 at the Exploration Assets to identify mineral deposits for further business growth. The Group has also extended its core business to include mining of gold and other precious metals, base metals, and minerals as well as trading in other commodities. 

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. 

• JCET has reported 2021 annual results, and there was RMB$8.59bn/9.5% of revenue/NM percentage in 4Q21. JCET 2021 grew 6.0% QoQ and 11.5% YoY respectively.
• Despite US-China trade war, the revenue from US clients are taking 50.2% in 2021, which is growing 23% from 2020 to 2021. 
• Given the 5G and China Automotive are developing actively, we believe these two applications shall be keeping the energetic momentum.

• MHI benefits from the structural themes of energy security and carbon neutrality
• MHI’s Energy Systems account for over 60% of operating profits
• The inevitable push to restart nuclear plants in Japan will be a catalyst for the share price

• The continuous increase of backlog and CMO projects would provide high visibility and certainty for the growth of Wuxi Biologics (2269 HK) in 2022.
• Given the complex international relations, it is possible that the US may add WuXi Biologics to any sanctions list again in the future, which means large stock price volatility.
• There could be some short-term rally, but due to the lack of clear positive “signals” in the industry, we do not think it means a complete “reversal” for WuXi Biologics. 

• We estimate that China accounts for almost 40% of Fast Retailing’s earnings. This growth engine is stalling
• The market has yet to discount these risks, despite warnings from H&M
• The stock is down 5% YTD, but trades at an 80% premium to global peers

• China Communications Construction (1800 HK) targets for at least 6% growth in revenue with slight operating margin expansion for FY22; and these should sustain its stable growth trend. 
• It will increase focus on “big city” projects where there are more opportunities. We think its target of at least 11.8% new contract value growth in FY22 is conservative.
• Reduction in losses at concessionary projects, improvement in operating cash flow and lowering of gearing levels all indicate that CCCC is moving in the right direction.

• The biggest characteristic of Innovent Biologics Inc (1801 HK) is its strong ability of resources integration. Besides, when it comes to execution, clinical efficiency and R&D productivity, Innovent deserves credit.
• If having 10 big commercialized drugs are the threshold for becoming a biopharma, Innovent’s upgrade from biotech to biopharma is almost complete. 
• Innovent has enough cash flow over the next few years to support development, and may even turn losses into profits. So, we think that Innovent could get through “this winter”. 

• Vertex Pharmaceuticals (VRTX US) is expanding its pipeline beyond its existing forte of cystic fibrosis, which enhances its long-term visibility.
• Gene editing treatment CTX001 for treating sickle cell disease and beta thalassemia is Vertex’s most advanced program outside of CF. With its initial label approval, CTX001 has multi-billion-dollar opportunity.
• A war chest of $7.5 billion and stable revenue flow from cystic fibrosis drugs should enable the company to pursue for the next leg of growth.