Equity Bottom-Up

• Grab (GRAB US) reported 4Q2021 results yesterday (before market). IFRS revenue decreased 44.29% YoY to $122m (vs consensus $219m) compared to $219m in the same quarter a year ago.
• Adjusted EBITDA (loss) for the quarter was -$305m (vs consensus -$206m) compared to -$102m a year ago as the company heavily spent on incentives to attract and retain drivers.
• Grab’s shares have lost almost 40.0% during intra-day trading as its growth story did not bode well with the investors.

• Snowflake dropped another monster quarterly result, with product revenues growing 102%, with rising margins and FCF generation.
• The 30% after hours drop was insane due to a misunderstanding of revenue guidance.
• An incredible entry point for those who wanted to buy Snowflake but were waiting for it to return to the low $200s

• Edvantage Group (382 HK), a play on higher education and vocation in China, now trades at 4.9x FY22e/3.8x FY23e. Concerns over the regulatory overhang are overdone, although they do exist.
• With a 30% payout ratio, the stock now trades at dividend yields of 6.1% FY22e/7.9% FY23e, assuming an EPS CAGR of 30% from FY21-23e. 
• The company continues to execute positively in its release in Q1 FY22 with a 62% increase in gross profits YoY, and it has low gearing at 21.7%  net debt/equity. 

• With attention on profitability of e-commerce increasing, Coupang provided guidance on its steady state margins. However, it lacked substance and only slightly better than consensus medium term expectations.
• Coupang (CPNG US)’s 4Q21 results, released after markets closed yesterday, was also disappointing as both revenue and OP fell short of consensus expectations.
• With the fair valuation as low as 50% of the current valuation, we think this earnings miss offers an opportunity on the short side with 50% potential returns.

• HDFC Bank continues to make steady efforts on the digitization front as it gears up to be a digitally savvy bank. It has been revamping its apps, PayZapp and Smartbuy.
• HDFC Bank (HDFCB) posted steady growth and improvement in asset quality in Q3FY22. The growth focus and risk-on stance is back in the retail book with normalization of the environment.
• While HDFCB’s stock has been under pressure over the past 1Y, we believe apprehensions around its restructuring book and the impact on its payments led fee business are overdone.

• Renesas’ investor day today focused on providing more details on existing themes such as the progress of synergies from Dialog. 
• The strong overall growth outlook and progress offering integrated solutions was also emphasised. 
• However, what we found most interesting was some of their commentary on RISC-V developments.

• IHI likely to benefit from rising defense spending as events in Ukraine serve as a wake up call to a Japan already worried about North Korea and China.
• Japan’s top maker of jet engines and solid-fuel rockets. Also geared to the recovery of commercial air traffic and auto production, and to carbon neutral technologies. 
• Sales and profit recovery underway. 60% upside to 15x FY Mar-24 EPS estimate. 

• RPPL reported decent Q3FY22 earnings as gross margins expanded to 36.9% vs 33.7% QoQ and EBITDA margins expanded to 13.7% vs 13.5% QoQ.
• The margin expansion seems to have been led by higher utilization of finished goods and WIP inventory which helped in curtailing adverse impact of volatility in raw material pricing.
• The material decline in depreciation and amortization expenses by 13% QoQ is likely due to consolidation of the Unit 1 and Unit 3 facilities.

• We expect MediaTek Dimensity 8000/8100 and 9000 are targeting shipment of ~30-40mn and 5-10mn sets respectively, which means high-end 5G smartphone chipset will aim at 10-14% 5G shipment in 2022.
• We consider the inventory argument raised for China smartphone could be a kind of  fake issue.
• In 5G era, the PMIC is about 2~3 times of 4G in size with the mature nodes.

• The paying user base continued growing in 4Q21 and has space to grow further.
• Game revenue recovered for the second quarter, as the games launched last year began to earn money.
• BILI’s advertising revenue grew significantly faster than the market size of Chinese online advertising.

• Sea Ltd (SE US)’s outperformance ended abruptly yesterday following the 4Q21 earnings release with the share price giving away 2/3rd of the gains made during the last five days.
• The company’s share price rallied around 30% in the last week of February, alongside rallying markets following a steep correction leading up to the Ukraine crisis.
• With the fundamentals continuing to deteriorate and interest rates expected to continue trending upwards, we expect Sea to continue its downtrend until its valuation multiples reach the pre-pandemic low level.

• Align Technology (ALGN US) is better investment idea than its Chinese competitor Angelalign Technology (6699 HK), due to its larger global scale of operation, early mover advantage, and cheaper valuation.    
• Align Technology is well-positioned for 20%+ revenue and earnings growth through 2024, driven by large and underpenetrated TAM of 19 million annual ortho starts.
• Align Technology shares are trading at a steep discount to Angelalign Technology shares. Price erosion due to the increasing competition remains the key risks for both the companies.

• 1H22 is likely the peak for VGA card. Our checks with VGA card makers indicate VGA card price fell in January/February and likely to continue for the rest of 2022. 
• Potential supply surge, demand decline, and price drop will all lead VGA market to trend south in 2H22.
• VGA makers will be negatively impacted in 2H22. Gigabyte may be hit the most whereas Asustek may hit the least. Nvidia should also be hit at a certain degree.

• On 2 March, it was reported in numerous media that Apple Inc will stop all product sales in Russia. This is a measure in response to Russia’s invasion of Ukraine.
• The US-led Foreign Direct Product Rule (FDPR) regulation may force a more stringent sanction that could force Samsung to stop selling smartphones in Russia. 
• Despite these concerns about FDPR, the decision as to whether to totally block Samsung’s smartphone sales to Russia has not been finalized. 

• We analyzed Suzhou Zelgen Biopharmaceuticals (688266 CH)’s key products(Donafenib, recombinant human thrombin for topical use, Alkotinib, Jaktinib, etc.). They have to face fierce competition, VBP impact and small market size.
• Through Gensun Biopharma, Zelgen has established the ability to develop advanced tumor immunotherapy drugs. Whether it can continue to launch new products is the key to test Zelgen’s R&D system.
• We are cautious about Zelgen because uncertainties led to inaccurate prediction on market size and outlook.Investors can choose to “catch” a rebound, but Zelgen is far from a complete reversal.

• It is usually the low season in the 1st quarter, and we expect the revenue/GM is about NT$8.55bn/25.5% in 1Q22 respectively.    
• KYEC’s main clients are MediaTek, NVDA, XLNX and etc., and some demands in Automotive also rising up quickly.
• In real terms, the shareholder might receive the same dividend amount of about NT$2.5+ for 2021. We think it likely targets a 5% dividend yield.

• Analyst meeting came out with negative tone. The company’s Korean SiC segment will continue to incur costs throughout 2022.However, the 45% tumble in share price since Nov’21 factored in negative 
• We expect 22E core profit will remain flat YoY at Bt2.3bn. Additional costs and microchip shortages will offset the growth from capacity expansion.
• Bleak outlook until 3Q22. Additional costs will drag core earnings until 3Q22. Current share prices are cheap and provide opportunity for share accumulation.

• HHC reported fourth quarter and full year 2021 ahead of our expectations on the heels of a super-pad sale and larger recognized amount of condominium sale revenue.
• HHC is now setting up for compounded growth in funds from operation (“FFO”) through plans for continued investment in its MPCs
• HHC’s disposal of its hospitality assets allowed HHC to aggressively repurchase its shares in the fourth quarter and into 2022

• Analyst meeting came out with a positive tone. We expect 2022 EBITDA to grow by 78%YoY supported by strong recovery in hotel businesses especially in Maldives and Dubai.We maintain BUY
• 4Q21 EBITDA reached the highest level since 1Q20 at Bt977m (+113%YoY, +307%QoQ) backed by strong recovery of hotel performance especially in Maldives and Dubai.
• The company plans to open39 new hotels with 8,038 rooms by 2025 and 200-250 new food stores of existing brands and JV brands in 2022 which could support earnings momentum

• The prospect of Russia being excluded from key emerging market indices is very real, in our view, and here we focus on the iShares MSCI Emerging Markets ETF
• The main beneficiaries of an index re-balancing would be the dominant EM Asian economies, and select African economies, but we cannot disregard LatAm and in particular we concentrate on financials
• Largest weightings aside, we highlight our preferred LatAm financial names based on fundamentals; Banco do Brasil, B3, BanColombia and Banco del Bajio, we also remove Banorte from the sell list

For our next Corporate Webinar we are glad to welcome Geo Energy Resources (GERL SP) CEO and Executive Director, Kum Hon Tung.

In the upcoming webinar, Kum Hon will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Insight Provider, Nicolas Van Broekhoven. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 8 March 2022, 17:00 SGT.

Geo Energy Group is a coal mining group, established in 2008, with offices in Singapore and Indonesia and production operations in Kalimantan, Indonesia. The group has transitioned from being primarily a coal mining services provider to a coal producer that subcontracts its coal mining operation.

Geo Energy has been listed on Singapore Stock Exchange’s main board (Stock Code: RE4) since 2012 and is part of the Singapore FTSE index.

• The demand for cybersecurity products and services has been expanding in Japan amidst an increase in frequent and sophisticated cyber-attacks in the country.
• Due to shortage of in-house IT professionals with knowledge on cyber security, there has been growing demand for outsourced managed security services in Japan.
• We have identified Trend Micro Inc (4704 JP) as our top pick in the Japanese cyber security market as there is further potential for top line and margins to expand.

• Zero COVID policy calls for another lockdown in Hong Kong as the number of cases rises.
• A reduction in the number of services will help to cushion the blow but may not help the overall grim prospect of the firm. 
• Lower traffic is negative for MTR Corp (66 HK)transport revenue as well as the commercial business from the station which combined make up to 50% of total revenue.

• New Horizon Health (6606 HK) has made some improvements based on 2021 preliminary financial data. The newly launched UU Tube also enriches the product line. 
• However, the industry is still at the early stage. In front of fierce competition, ColoClear’s bottleneck is obvious. The cheaper products (Pupu Tube, UU Tube) could have more market acceptance. 
• Based on our analysis, our view is that the Company may rebound temporarily, but it is too early for a complete reversal.

• The shares have dropped back nearly 30% and their valuation is now reasonable. Guidance looks reasonable, but recent sales and profit trends show weakness.
• Factory Automation, Die Components and the VONA e-commerce business have all recovered.
• A new era of higher profitability may be at hand, but in view of market and economic uncertainty, approach with caution.

• We believe revenue will grow by 23% YoY in 4Q21 and by 18% in 2022.
• We believe JD is the most promising direct-sales e-commerce company in China.
• However, short video apps have been taking advertising market share from e-commerce apps.

• REGI being bought by CVX for $61.50 per share in cash
• We believe the valuation of approximately $3 billion is high enough to deter another bidder from surfacing
• At $61.50, REGI’s stock returned 265.4 percent since we initiated coverage on April 24, 2019, and 44.9 percent on a year-to-date basis

• Short video has been taking time on site from game players.
• Main games are shrinking, but the authorities have not been granting license to new games.
• The authorities also banned Chinese players from playing with overseas game players.

• Grab (GRAB US) is currently trading at US$5.80 per share, more than 50.0% below its IPO price of US$13.06 per share.
• The company’s mobility business was severely impacted due to the pandemic and has not yet recovered to pre-pandemic levels. Grab is reporting 4Q2021E results on Thursday (03rd March).
• As most of the countries in the SEA region opens up economies with Omicron-related fears fading, we expect gradual recovery in mobility business which should help re-rate Grab’s shares upwards.

• * BDO Unibank (BDO.PM) [BDO] reported 4Q21net income of PHP 11.0 bn, a PHP 1.0 bn (10.0%) linked quarter increase, driven by surprisingly positive operating jaws; 
• The level of net new NPLs declined PHP 319 mn or 1.7% on an annualized basis which is a wonderful turn of events for BDO; and
• By our calculation, BDO’s reserves appear fine where they are provided credit quality doesn’t reverse course -suggesting earnings strength on the horizon.

• We estimate Phison could reach NT$14.1bn sales and GM 25% outlook in 1Q22.
• For 2022, it stars with a good beginning for 5~10% NAND price lifted, and Phison’s insistence on NAND Flash controller technology and allied with AMD.
• Phison would maintain its solid dividend policy and it’s 80% in the past. It was ~NT$63 EPS in 2021. 

• Regarding the concern over incapability of EASTW to extend concession water pipeline system belonged to the Treasury Department,we have concluded the impact under our base case scenario that the company
• 4Q21 net profit was at Bt184m (+16%YoY, -20%QoQ) while 2021 net profit reported at Bt1.1bn (+39%YoY), in line with our forecast and expectation.
• 4Q21 raw water sales volume reported at 59.3 million m3 (+1%YoY -6%QoQ). Tap water sales volume contracted to 23.0 million m3 (-5%YoY -6%QoQ).

• Full-Year earnings growth of 17% suggested a slowdown in 2H21, but this is mostly a result of higher base. A 3pp increase in dividend payout ratio also demonstrated management’s confidence.
• Focus should be on the positive new project momentum – 10 secured in 2H21, versus only 4 in 1H21. More special purpose bonds issuance should drive project pipeline.
• CE Water’s valuations are cheap at 0.43x P/B and 3.8x PER for FY22F. Its prospective dividend yield of 7.9% also provides an appealing income component. 

• Brazil’s consumer credit quality trends to January deteriorated relative to the previous month, with corporate credit quality worsening only slightly 
• System loan growth was 16.4% for the twelve months to January which was very similar to the YoY rate for December (16.3%), totally due to the faster consumer loan growth 
• The BCB is in the latter stages of the benchmark rate hiking cycle, which is impacting credit quality, especially in consumer categories; nonetheless, Brazilian banks benefit from higher loan spreads

• Siam Commercial Bank (SCB TB)recently published a solid set of results reflecting the gradual recovery of its core banking business and increasing digitalisation of its customers base.
• The real excitement will come with the formation of SCBX, involving the reallocation of excess capital, which will be invested in adjacent lending and high-growth technology businesses.
• Siam Commercial Bank (SCB TB)trades at a slight premium to peers on 0.92x FY2022E PBV but has the potential to generate higher returns, which should lead to further re-rating.

• HKEX reported a weak set of 4Q21 earnings results of HKD 2.7 bn, declining HKD 577 mn (17.7%) linked quarter, driven by the decline in cash ADT and higher costs;
• Derivative activity remained flattish linked quarter with contract volume at 507 thousand – despite the successful launch of the MSCI China A50 Connect (HK A50); and
• With HIBOR set to increase, HKEx is likely to become more reliant on lower quality investment income.

• Astra International (ASII IJ) FY2021 results reflect a rapid recovery in its core auto business plus commodity-related businesses, with +96% YoY net profit growth stripping out Bank Permata (BNLI IJ). 
• The auto and related finance businesses should continue to perform well in 2022, with government luxury tax stimulus measures in place plus commodity prices will support United Tractors’ performance.  
• Astra International (ASII IJ) remains a top pick for the economic recovery in Indonesia plus the company continues to look for investment opportunities to redeploy funds raised from Permata sales.

• In a move to shore up liquidity, but not to repay debt, Evergrande has sold stakes and “right to debt” in four development projects to SOEs at “fire sale” prices;
• Only USD 47.2 bn in liabilities to go Chairman Hui, but didn’t you say less than two weeks ago “no fire sales”?; and    
• Municipalities, investors, and CINDA are picking off Evergrande assets on the cheap as well.    

• Currently, Angelalign could not be compared with Align Technology in many aspects, but Angelalign’s PE/TTM indicates it may have already overdrawn the performance of the next few years.
• The growth outlook of Angelalign has uncertainties. Any deceleration in revenues and profits in any given year is likely to lead to a significant valuation correction. 
• High valuation cannot be supported without certainty of growth. Therefore, based on our analysis, our view is that Angelalign could be a short-term trade, but not long-term hold.

• Moderna Inc (MRNA US) , the leading biotechnology company and producer of mRNA-based COVID-19 vaccine Spikevax, reported total revenue of ~$18.5B and net income of $12.2B in CY’21.
• Management announced a new $3B share repurchase plan and fully utilized the previous $1B buyback program as valuations looked attractive. 
• We expect the company will generate ~$22.1B of free cash flows from CY’22 through CY’24, and we would be buyers on any weakness in Moderna. 

• Maybank reported 4Q21 NPAT of MYR 2.1 bn, improving MYR 372 mn (22.1%) linked quarter, reflecting revenue improvement across the board and a provision cut; 
• Net new NPLs aggregate MYR 2.3 bn, intimates an 83.4% QOQ increase in problem loans on an annualized basis; and 
• Maybank was less than aggressive provisioning, and now an MYR 8.0 bn reserve shortfall exists today in its loan loss reserve or three quarters of NPAT.

• Square Pharmaceuticals (SQUARE BD) has received permission from the Bangladesh Bank to invest overseas, after the government issued new rules for overseas investment.
• Per initial plan, Square Pharmaceuticals will invest $1 million in Philippines, which is the third largest ASEAN region. The company’s Kenya manufacturing facility is expected to start production soon.
• During H1FY22, Square Pharmaceuticals revenue growth of 17% outpaced the industry growth. The company generated higher net margin than its closest competitors.

• Samsung Electronics (005930 KS) goal to be the #1 semi player in the world in danger
• An internal business audit being performed which is an indication of what to do with strategy
• TSMC (2330 TT) has always been the benchmark; does the focus change ?

• LINE Gift is fast becoming the most popular way to send gifts of all kinds, even traditional gifts sent at mid-year and New Year. 
• This is good news for Z Holdings (4689 JP) and Softbank, as well as LINE, as the gifting platform acts as a unifying point for their disparate e-commerce platforms.
• Although the corporate gift market is in decline, personal gift giving remains a growth market, offering further upside.

• We analyze Q3 FY22 results for Escorts Ltd (ESC IN) & Mahindra & Mahindra (MM IN) with a primary focus on farm equipment (Tractor) divisions. 
• High base, price increases and a move to support dealers indicate muted volumes ahead for Escorts Ltd (ESC IN).  
• For Mahindra & Mahindra (MM IN), valuations are compelling, auto volumes are good, but recovery in farm equipment remains the key catalyst for outperformance. 

• KnowBe4 (KNBE US)  is the world’s largest security awareness training platform, teaching people how to recognize bad phishing, bad social engineering scenarios and report to management.
• The most notable ransomware attacks began with social engineering, and social engineering has remained a top threat for the last five years, according to a report released by Verizon.
• We like the company’s cash generating SaaS model, strong balance sheet, and multi-product approach targeting SMBs and the enterprise market worldwide.

• Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba’s power semiconductor operations.
• It would violate Rohm’s commitment to a sound financial structure and saddle it with an integration problem that might never be solved.
• Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.

• AEM (AEM SP) released record 2H21 results which indicate Intel Corp (INTC US) ramp continues as expected. Management expects more of the same in FY22.
• Intel Corp (INTC US) has a variety of issues but it will spend massive amounts of cash to keep up with rivals. AEM (AEM SP) remains a major beneficiary.
• Fair value unchanged at 8 SGD, or 78% upside from current 4.5 SGD share price.

• Alibaba Group (9988 HK)’s 3QFY22 results was disappointing with the company’s revenue growing by 9.7% YoY, the slowest YoY growth since inception and missing the consensus revenue target by 1.3%.
• The situation appears far worse on the profitability side considering that OP (excluding impairment of goodwill) fell more than 34% YoY to RMB 32.2bn in 3QFY22.
• We feel there’s a lot more downside to Alibaba shares over the medium term as the company’s cash cows are starting to falter in these tough conditions.

• Softbank Group (9984 JP) shares have fallen 46% since 31 March v a 52% decline for Alibaba Group (9988 HK) with little daylight between the two since August
• That reflects fading influence from Vision Fund which is shed $12bn in value Q4 to date and c. $30bn this fiscal year.
• The discount remains in the 50% range as tailwinds from the share buyback depend on a successful IPO of ARM, where the magnitude and timing remain uncertain

• Indosat (ISAT IJ)‘s recent results reflect a company going through a positive transition with sales up by +12.4% and EBITDA up +21.4% suggesting a turnaround in the making.
• The company’s acquisition of Hutchison’s 3 looks astute, removing an aggressive competitor, propelling into the number two slot, as well as providing potential operational and scale-related synergies. 
• 2022 will be the company’s year of transition, with higher capex to realised synergies and keep improving the network quality. Valuations are appealing for long-term investors. 

• We interact with channels of Mahindra & Mahindra (MM IN) , Bajaj Electricals (BJE IN) & Havells India (HAVL IN) with an objective to understand sources of stress in rural India. 
• Price increases, lack of savings and irregular rural cash flows are taking a toll on Tractor Sales. 
• In durables, there are no signs of recovery, with lower prices being the only catalyst that would bring back volumes. 

• Ujjivan Financial Services (UJJIVAN IN) had announced a reverse merger back in October 2021 where the holding company (Ujjivan FS) will be merged with Ujjivan Small Finance Bank (UJJIVANS IN).
• The share swap ratio given in the scheme of amalgamation clearly showcases a significant merger arbitrage opportunity.
• However, there has been no major interest in this very visible opportunity. We try to justify the market behavior.

• Downgrade to SELL from HOLD rating and cut TP by 41% to Bt14, derived from 1.4xPBV’22E, Asia ex-Japan Materials sector. We believe the valuation remains demanding with the stock trading
• Its 4Q21 core profit was at Bt175m (-83%YoY,-71%QoQ), plunged due to narrow margin, following crude price surged and higher OPEX.
• Excluding extraordinary items, 2021 core profit was at Bt2.9bn, increased 9%YoY, attributed to better EBIT margin from lower SG&A-to-sales ratio

• XPER is setting the course for revenue growth after reporting fourth quarter 2021 results. Aiding the process to revenue growth is an increase in baseline IP license revenue for 2022
• XPER disclosed it has signed a hybrid bonding IP licensing agreement with Micron Technologies (MU)
• XPER is broadening its presence in the automobile space. During the fourth quarter earnings call, XPER disclosed Toyota Motor (TM) will include HDRadio in all its car models

• BABA’s app, SDTao, has been taking active users from Pinduoduo.
• We believe BABA’s physical store chain, Freshippo, will go public.
• We believe BABA will stop investing in unprofitable Ele.me as it underperforms Meituan.

• Japan continues to move forward with preparing for the shift to a hydrogen economy with new developments in both rail and hydrogen production. 
• The efforts to produce hydrogen through artificial photosynthesis are particularly interesting given the potential to reduce hydrogen costs drastically. 
• While Toyota is of course involved in the efforts, the key beneficiary for the hydrogen economy remains Iwatani.

• Lawson will begin offering made-on-demand meals direct from its convenience stores. 
• Suitable stores are being renovated to include in-store kitchens, with 100 planned for this time next year and 1,000 by 2025, with delivery handled by companies like Uber Eats.
• Most other chains offering made-to-order meals are small, so Lawson could well take a large share of this growing market.

• Impressive result with underlying net profit reached US$698m in FY21, up sharply from loss of US$19.4m a year ago. Net gearing dropped to 7% with record-high ROE of 58%. 
• With 48-64% of Handysize and Supramax days covered at TCE slightly below FY21 level, it has well secured FY22 profitability, with upside from higher rate in rest of this year.
• We expect ROE to be over 30% for FY22, making its 1.3x P/B not expensive, especially with an improved balance sheet. Dividend yield of 14% for FY22 is another attraction.

• Kalbe Farma (KLBF IJ) released a reassuring set of results with sales growing +13.6% and net profit by +12.5% in 2021, with growth coming from prescription drugs and distribution
• 2022 should see growth picking up across all of its divisions with recovery for consumer health and nutritionals plus its digital strategies are starting to make a difference. 
• Kalbe Farma trades in 22.8x FY22E PER and 21.0x FY23E PER versus its 5-year average forward PER of 26.3x forward PER, making it look attractive at current levels. 

• Marui Group (8252 JP) is increasingly ethereal, shifting further away from selling merchandise through tenants. 
• While seen as a shop building operator, Marui is still true to its service origins as a consumer finance business.
• Now even its shop buildings are increasingly devoted to non-stuff with the company aiming for 70% of tenancies to be selling things other than merchandise by 2025.

• Revenue grew strongly due to the new game, Harry Potter.
• We believe NTES has confidence in the growth of cloud music.
• We believe the stock has an upside of 32% for the year end 2022.

• Hyosung TNC announced 50,000 won in DPS in 2021, up 10x from 2020. This is likely to reverse the recent declining share price trend in the  past several months. 
• Hyosung TNC’s current dividend yield is 10.5%, representing one of the highest dividend yields in Korea. Dividend payout in 2021 was 28%.
• We believe Hyosung TNC is well positioned to outperform KOSPI in 2022.

• Excluding extraordinary items, ERW’s 4Q21 normalized loss was at Bt371m, the eighth consecutive quarter loss, due to operations under EBIT breakeven.
• 4Q21 negative EBITDA declined to -Bt29m compared to -Bt30m in 4Q20 and -Bt243m in 3Q21 backed by recovering overall hotel operation.
• Lockdown easing and launching ‘Rao Tiew Duay Kan phase 3’ program during 4Q21 resulted in improving occupancy rate (ex. Hop INN segment) to 30%  up from 25% in 4Q20 

• Hitachi is evacuating more than 7,000 GlobalLogic employees from Ukraine to other countries, but IT workers are mobile and these may have more work due to cyber attacks.
• Hitachi Construction Machinery and other Hitachi Group divisions do some business in Ukraine, but we expect the impact of the crisis to be manageable and temporary.
• Hitachi Ltd shares are down 25% since November and the P/E ratio is near the bottom of its historical range. 

• Sony had a busy 18th Feb as both the Uncharted movie and Horizon Forbidden West launched. 
• Uncharted has done reasonably well though not to the extent we believed likely while the Horizon franchise could be on the way to truly elite status. 
• We look for both releases to contribute to a strong 4Q along with Gran Turismo 7.

• BFI Finance Indonesia (BFIN IJ) released an impressive set of FY2021 results, as new financing picked up significantly and funding and credit costs declined in 4Q2021.
• Management is optimistic on the outlook for new financing in 2022 plus the potential for significant tailwinds from the association with GoTo plus inorganic growth opportunities. 
• BFI Finance Indonesia trades on 2.2x FY22E PBV with a forecast ROE of 16.2%, above its 5-year average PBV but it deserves a re-rating given its association with GoTo.

• The 4Q21 revenue is HK$6.2bn (US$796.3mn), a 43.9% increase YoY. GM 41.3% is a 1,051bps increase YoY. 
• Some memory market customers, like Samsung and Hynix, are adopting ASMP’s mainstream wire bond and advanced packaging tools for high volume manufacturing requirements. 
• Full year 2021 dividend per share of HK$3.90, a 44.4% YoY increase.

• Rakuten Inc (4755 JP) is currently trading 20% below the bottom end of the long term trend channel.
• With consensus FY+2 EBITDA at ¥309.8bn, Rakuten’s current EV/EBITDA is at an all-time low of 1.7x compared to the historical median and peak of 9.0x and 16.1x respectively.
• Based on the consensus FY+2 EBITDA and EV trend, we feel the fair valuation of Rakuten could be somewhere around ¥3,000bn EV.

• We analyze Q3 FY22 Earnings for Bajaj Electricals (BJE IN) , Crompton Greaves Consumer Electricals (CROMPTON IN) , Havells India (HAVL IN) and Stove Kraft (0490943D IN) 
• Stress in rural is hurting BJE, CROMPTON is riding high on new products, Upcoming AC season is the key for HAVL. For Stove Kraft growth is falling off a cliff. 
• BJE and HAVL would be best placed to explore a potentially long and short respectively. 

• Last month, Welcia announced the acquisition of Kokumin, the 30th ranked drugstore that runs a well-respected chain stretching across the country. 
• As the newly formed Matsukiyo Cocokara group continues to struggle, another year of high growth means Welcia will be only just behind when FY2021 results come in.
• Overall growth in the drugstore sector remains strong and could even overtake convenience stores in the near future.

• Thanks to the huge supply chain capabilities of its parent Itochu Corp (8001 JP), FamilyMart Co Ltd (8028 JP) is moving into new categories of private label product.
• These are not the traditional staples of the convenience store but new types of more fashionable lifestyle products in clothing and cosmetics.
• Recent results show successful collaboration with Noin for cosmetics and with Hiromichi Ochiai from Facetasm for clothing basics, selling more than 1 million items each.

• The Nikkei reported today that Toyota had already agreed to accept its unions wage hike demands and in full. 
• This is unusual given typically fair but tough negotiations and Toyota’s penchant for very strict cost control. 
• Although the news does not appear to be attracting any great attention we believe it is actually quite significant.

• OCBC reported 4Q21 net profit of SGD 973 mn, declining 20.5% linked quarter, as a result of an increase in loss provisions and higher costs; 
• Were it not for the 51.8% decline in Singapore NPLs, credit quality would have been disastrous for OCBC with credit falling off of a cliff regionally; and 
• Given the increase in net new NPLs, reserves would appear to now be wanting by SGD 2.8 bn plus or nearly three quarters of bottom-line results.

• OCBC reported 4Q21 net profit of SGD 973 mn, declining 20.5% linked quarter, as a result of an increase in loss provisions and higher costs; 
• Were it not for the 51.8% decline in Singapore NPLs, credit quality would have been disastrous for OCBC with credit falling off of a cliff regionally; and 
• Given the increase in net new NPLs, reserves would appear to now be wanting by SGD 2.8 bn plus or nearly three quarters of bottom-line results.

For our next Corporate Webinar we are glad to welcome Trendlines Group Ltd (TTGL SP) Chairman & CEO, Steve Rhodes.

In the upcoming webinar, Steve will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Sameer Taneja. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 1 March 2022, 17:00 SGT.

Trendlines invent, discover, invest in, and incubate innovation-based medical and agricultural technologies. They invest principally through their incubators: 

• Israeli government-franchised incubators – Trendlines Medical and Trendlines Agtech

• Singapore incubators – Trendlines Medical Singapore and AFIC (agrifood incubator)

• In-house innovation center – Trendlines Labs

• Funds – Trendlines Agrifood Fund and Bayer Trendlines Ag Innovation Fund. 

 As intensely hands-on investors, they are involved in all aspects of their portfolio companies from technology development to business building.  Simply stated, Trendlines create and develop companies to improve the human condition.

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.

• Meituan (3690 HK) share price is down more than 20.0% from Thursday’s close following announcement on new regulations for food delivery platforms.
• New regulation states that food delivery platforms should further reduce the service fee charged from restaurants to lower operating costs for food and beverage businesses.
• Meituan’s food delivery business makes about 88% of its revenues from commissions while the remainder comes from online marketing services.

• We spoke to Hoya today to understand market trends in both the semi and healthcare areas. 
• Overall, business conditions remain strong although momentum appears stronger for the Life Care segment. 
• More pertinently, we interpret some of the commentary on the semi capex side as suggesting some downside risk to overall spend.

• Subsidy removal spooked investors but as proven, January 2022 sales number is even higher than last year. 
• The main concern is the expensive valuation among the other Hang Seng Index Constituents rather than anything else.
• In the medium term, and upon the cessation of the Ukraine-Russia tension, BYD (1211 HK)could be an interesting name to have in the portfolio, especially at a lower valuation.

• XL Axiata (EXCL IJ) continues to see strong growth in data revenues and traffic with data -pricing improving in 4Q2021 and consumers taking more.
• The company continues to stress its aim to be the number one convergent operator and the successful completion of the Link Net (LINK IJ) acquisition accelerates this move.
• XL Axiata continues to raise data prices and will start to see synergies from Link Net from 3Q2022, including potential cost and revenue benefits. Valuations are attractive. 

• Excluding one-off gains, Edelweiss reported weak Q3FY22 earnings, led by the credit business that has been adversely impacted by operational de-leverage from declining AUM.
• However, barring the credit business, Edelweiss’ rest of the businesses continue to post strong growth and profitability. 
• There are material headwinds in the credit business currently; however, these are poised to recede as the business scales up over the next 2Y.

• Despite the elevated valuation, KPIT remains a high conviction idea for us as we see potential for 21%+ earnings CAGR over the next decade. 
• Given the strong growth visibility, KPIT can sustain its current elevated valuation of 12x P/B and thus an investment in it can offer 21%+ CAGR over the next decade.
• Even if its exit valuations were to decline by 1/3rd at the end of the decade, it can still offer 16%+ CAGR.

• WuXi AppTec Co. Ltd. (2359 HK) released the preliminary financial data for 2021. It is not surprising that the Company could maintain its outstanding performance.
• We listed some interesting points to ponder, such as projected declining performance of WuXi DDSU and related chain reaction, the change in fair value of financial assets, overseas anticipation, etc..
• It’s understandable if investors choose to start making layout at this point due to attractive valuation and longer “reflection arc”,but need to be patient for WuXi AppTec to achieve reversal.

• China Energy Engineering (3996 HK) and Power Construction Corporation Of China (601669 CH) are the two giants in power construction industry in China; but there are significant differences between them.
• Power China has better business and generation mix while Energy China won in terms of margin and profitability, leverage and financial position, new order momentum and hydrogen energy expansion. 
• We like Energy China “H” for cheap valuation, secured earnings and deep discount to Energy China “A”. For just the A-shares, we prefer Power China “A” to Energy China “A”.

• We are outright negative on regional e-commerce names leading into earnings as a small miss could spark a significant sell-off in the current market conditions.
• Even though most regional EC names including Coupang (CPNG US) are down by around 65%, we fear that there’s further downside risk in a rising interest rate environment.
• In the meantime, we expect Coupang to miss 4Q21 revenue when they report on Thursday. In addition, Coupang has the biggest downside potential as it is expensive compared to peers.