In today’s briefing:
- A Pair Trade Between Orion Holdings and Orion Corp
- Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
- Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead
- Pfizer Inc (PFE US): Stellar Q3 Performance; Despite Unfavorable Fx Impact, Raises 2022 Guidance
- MHI (7011) | The Time to Act on Energy Transition
- SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily
- KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate
- Save Foods Inc.: A Uniquely Positioned Small-Cap In Food Safety
- Japanese Cosmetics: Trading Around Q3 Earnings
- LICHF: FY23 NIM Guidance Intact Despite One-Off Impact in Q2FY23
A Pair Trade Between Orion Holdings and Orion Corp
- In this insight, we discuss a pair trade between Orion Holdings (001800 KS) (go long) and Orion Corp (271560 KS) (go short).
- Orion Holdings has a dividend yield of 4.6% versus 0.7% for Orion Corp. For the value investors that seek higher dividends, Orion Holdings is more attractive versus Orion Corp.
- We believe the price gap between these two stocks have widened too much in the past several months and this gap is likely to decrease again.
Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
- Ad sales were weaker than we expected and the company has revised full-year guidance for that business down. That is not surprising in light of the macro environment
- But it also implies potential ad revenue erosion YoY in H2 which we have never seen before. Even at the worst of the Covid crisis, ad revenue growth was positive
- Management appears more confident in hitting FY22 EBITDA targets as it has room to maneuver on the timing of investment spending but we think FY23 targets are looking tougher
Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead
- After a 86% decline on share price YTD, we believe it’s time to revisit Xpeng.
- Having gone through all the negatives which led to Xpeng’s underperforming vs peers, we believe the market has overreacted, while the company’s advantages/technology improvements have been ignored.
- After 4 months of sales decline, company fundamentals would bottom out from November onwards with G9 starting to speak for itself.
Pfizer Inc (PFE US): Stellar Q3 Performance; Despite Unfavorable Fx Impact, Raises 2022 Guidance
- Pfizer Inc (PFE US) reported beat-and-raise Q3 results. Revenue declined 2% operationally to $22.6 billion, beating consensus by $1.5 billion. Adjusted EPS of $1.78 was ahead of consensus of $1.40.
- Pfizer raised its 2022 financial guidance, on an operational basis, for revenue and adjusted EPS by approximately $1.7 billion and $0.19, respectively.
- The company aims to launch 19 new products or indications, of which more than two thirds have the potential to be blockbusters, in the market over the next 18 months.
MHI (7011) | The Time to Act on Energy Transition
- It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27
- Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders
- MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize
SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily
- In March, SanBio Co Ltd (4592 JP) completed the application filing for approval for its investigational product SB623, as a treatment for chronic motor deficit from traumatic brain injury.
- With a priority review designation, SB623 approval was expected in September. SanBio is expecting a delay in the approval. SB623 is now expected to be approved next year.
- For FY23, the company is now expecting operating expenses of ¥8.1 billion, which exceeds the earlier expectations by ¥2.2 billion due to an anticipated increase in manufacturing-related expenses.
KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate
- KDDI posted its best revenue growth since 2019 but an acceleration in power costs and expenses associated with the July network outage kept a lid on margins
- On balance, the print is positive and management remains confident on full-year targets
- There are sector reads from corporate sales (good), higher power costs (bad), and stable competitive intensity whilst modest erosion in roaming revenue indicates Rakuten’s rebound from peak losses is modest
Save Foods Inc.: A Uniquely Positioned Small-Cap In Food Safety
- This is our first research note on Save Foods Inc.
- The company is a distinguished player within the field of developing green solutions for the food industry in order to improve food safety and increase shelf life.
- With a rising number of quality inspections faced by food companies, increased awareness of foodborne illnesses, and the necessity to avoid food contamination, Save Foods’ offerings are in high demand.
Japanese Cosmetics: Trading Around Q3 Earnings
- A couple of Japanese cosmetics names, reported their quarterly results this week, with considerable earnings misses
- Kao Corp (4452 JP) fell 8.5% today following a 40% OP miss while Pola Orbis Holdings (4927 JP) was flat after a narrow miss of 2% from a relatively low consensus estimate.
- If the two reports released this week are something to go by, we could expect large misses, for Fancl Corp (4921 JP) and Kose Corp (4922 JP) next week.
LICHF: FY23 NIM Guidance Intact Despite One-Off Impact in Q2FY23
- While LIC Housing Finance (LICHF IN) posted substantial decline in NIM to 1.80% vs 2.54% QoQ, this was largely due to one-off impact from a couple of items.
- LICHF has maintained its prior guidance of beating FY22 NIM of 2.29%, which means that for full-year FY23, LICHF is still on track for a NIM of 2.3% or above.
- There was a one-off provisioning relating to INR 180cr of write-offs, which was fully provided for, but due to Ind-AS accounting had to be booked again resulting in excess provisioning.
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