Daily Brief Equity Bottom-Up: 2024 High Conviction – BEN – Almost All Mortgages | NPLs in Decline | Credit Costs Can Move Lower and more

• In any economy with persistently high interest rates, high living costs and decelerating loan growth, the risk is generally greater for bad corporate loans, not mortgage loans.
• BEN is nearly only residential mortgage loans, highly different to CBA, NAB, WBC, ANZ and MQG. This is also clear in long-term low levels of credit costs.
• NIM has moved up for BEN in FY23. There is limited risk of maturing debt to hurt its NIM in FY24, very much unlike large peer banks, especially NAB, MQG.

• PDD reported C3Q23 top-line, non-GAAP EBIT, and GAAP net profit 9%, (4%) and in-line vs. our estimate, and 28%, 29%, and 42%, vs. consensus respectively.
• We estimate that Temu reached positive gross profit for the first time in 3Q, one quarter ahead of our prior estimate.
• We believe increased prices on its US platform was the main driver, while it was able to maintain supply prices.

• We focus on five key factors, namely capital adequacy, credit quality, exposure to government securities, interest rate gearing and valuation with growth metrics for our Japanese banks universe
• It is important to note that the relaxation of yield curve control is translating into rising loan yields generally in the BoJ data to September-end 2023
• We stick with our positive views on Resona, Mizuho and Concordia; we remove Hachijuni from the buy list and SMFG, replacing the latter with MUFG in the large cap banks

• Kolte Patil reported a steady Q2FY24 led by continued momentum across sales, business development and deliveries.
• Sales volume grew by 5%+ QoQ to 0.98mm sq ft in Q2FY24, led by strong sales in the Life Republic projects. This brings the H1FY24 total sales volume to 1.91mm. 
• With 4.94mm sq ft slated to be launched in H2FY24 vs 2.73mm launched in H1FY24, Kolte Patil is on track to achieve its FY24 sales guidance of 3.9mm+ sq ft.

Immix hosted a key opinion leader (KOL) event highlighting the long-term potential for NXC-201, the company’s B-cell maturation antigen (BCMA) targeting CAR-T therapy to address the fragile amyloid light chain amyloidosis (ALA) patient population. This is the only CAR-T therapy in development for the treatment of relapsed/refractory ALA to our knowledge and represents a significant unmet medical need as there are only limited treatment options and no standard of care. Relapse remains a common issue and, although still in the very early stages, the KOLs had optimism in the positive response rates shown thus far in the NEXICART-1 study. We anticipate rolling readouts for the NXC-201 ALA studies (particularly NEXICART-2) as the data become available.

On 22 November, Pan African Resources (PAF) announced that operations to date in FY24 had performed in line with, or better than, expected, with gold production for H124 anticipated to be in the range 94,000–98,000oz (cf 92,307oz in H123). As a result, it increased its production guidance for FY24 to 180,000–190,000oz, which caused us to increase our production estimate in turn by 1.9% (or 3,575oz) to 189,725oz. The change made only a modest difference to our EPS forecasts for FY24 (see Exhibit 2). However, it increases our confidence in those estimates, which are already at the top of a relatively wide range of expectations.

• Concord Biotech Ltd (658823Z IN) reported robust performance in Q2FY24. Revenue grew 65% YoY to INR2.6 billion, while EBITDA and PAT jumped more than 3x compared to year-ago quarter.
• The company has increased capacity utilization at all the three manufacturing facilities. Operational efficiencies have helped the bottom line to achieve faster growth than the top line.
• With a high runway for growth and improving market scenario, especially for Indian pharma companies, the company remains highly optimistic to surpass its historical 18% revenue CAGR this year.