In today’s briefing:
- Adani Group’s Indictment: Bribery, Fraud, and the Global Fallout
- The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (November 21)
- Tuya: Improving Sales Growth and Profit Margins Help to Clench Investment by 65 Equity Partners
- DigiPlus (PLUS PM): Brazil License And CasinoPlus Acquisition Game Changing Catalysts For The Future
- Straits Trading (STRTR SP): An Undervalued Real Estate Stock with Multitude of Opportunities
- PDD (PDD US): 3Q24, Focuses on Growth, But Not Profit Margin
- Qualcomm’s $4 Billion PC Chip Bet: Can It Dominate Beyond Smartphones?
- [Xiaomi Inc. (1810 HK, BUY, TP HK$33) Target Price Change]: Good Result, and It Will Only Get Better
- [Trip.com (TCOM US, BUY, TP US$74) Target Price Change]: C3Q24 Review: Domestic Story Back in Focus
- Why Ancora Thinks Harmonic Inc. Should Explore a Strategic Sale: What Investors Need to Know!
Adani Group’s Indictment: Bribery, Fraud, and the Global Fallout
- Gautam Adani and executives indicted in U.S. for bribery, fraud, and obstructing justice tied to renewable energy projects worth billions.
- Allegations spotlight governance risks, promoter-driven models, and transparency issues in Indian conglomerates, threatening investor trust in Adani Group and renewable energy sectors.
- Adani Group issued media statement saying that charges in indictment are baseless and denied.
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (November 21)
- Hong Kong is again trading well below its historical multiple valuation levels after the October/November correction. Mainland investors bought a record amount the day after Trump’s win.
- Kingsoft Corp (3888 HK) reported consensus beating results with its online game segment surging. The company is benefiting from AI upgrades in its office SAAS business.
- Precision Tsugami China (1651 HK) posted blockbuster earnings for its 1H25 as the machine tool sector rebounds on the back of factories upgrading to intelligent manufacturing.
Tuya: Improving Sales Growth and Profit Margins Help to Clench Investment by 65 Equity Partners
- On 18 November, it was announced that 65 Equity Partners (backed by Temasek) will invest US$100 million (S$134 million) for a 13% stake in Tuya Inc (TUYA US).
- Net cash as a percentage of market cap is currently at 92%. Tuya’s sales growth and improvement in operating margin in 1Q-3Q 2024 have also been impressive this year.
- Comps are trading at average EV/EBITDA of 13.7x in 2025 versus 2.3x for for Tuya. If Tuya continues its turnaround, its valuation gap versus its peers could decrease further.
DigiPlus (PLUS PM): Brazil License And CasinoPlus Acquisition Game Changing Catalysts For The Future
- DigiPlus Interactive (PLUS PM) presented PSE Star investor day yesterday and briefly analyzed two game-changing catalysts from the call: a) CasinoPlus acquisition and b) Brazil license.
- The expected TAM associated with e-games/Bingo in Brazil is 250 bn pesos (4 bn USD), compared to the Philippines, which is currently cycling at 160 bn pesos (Q3 PAGCOR data).
- The stock trades at 7.8x FYPE with 15% of the market cap in cash and a 3.8% dividend yield (30% payout ratio) with a seasonal uptick in Q4 FY24.
Straits Trading (STRTR SP): An Undervalued Real Estate Stock with Multitude of Opportunities
- Straits Trading (STRTR SP) is a conglomerate-investment company with diversified investments in resources, real estate and hospitality.
- Straits Trading’s key growth engine is its real-estate arm – Straits Real Estate (SRE) which has a diversified property portfolio across different geographies and various sectors.
- Despite fluctuations in STC’s earnings, the company continues to pay stable dividends to its shareholders. As at the end of June 30, 2024, Straits Trading generated cash and bank balances of SGD476.4m. STC continues to generate positive cash from operations.
PDD (PDD US): 3Q24, Focuses on Growth, But Not Profit Margin
- In 3Q24, PDD released strong revenue growth, but a flat margin.
- We believe, in 2025, PDD will continue to focus on growth rather than profit.
- We conclude an upside of 43% and a price target of US$167 for 2025. Buy.
Qualcomm’s $4 Billion PC Chip Bet: Can It Dominate Beyond Smartphones?
- Qualcomm is aggressively pushing into the PC market, aiming to transform its identity from a mobile chip giant to a diversified computing powerhouse.
- At its recent investor day, Qualcomm announced bold revenue projections of $4 billion from PC chips by 2029, alongside significant strides in automotive, industrial IoT, and XR markets.
- This marks a pivotal moment as Qualcomm ventures beyond its traditional smartphone business, which currently accounts for 75% of its chip revenue.
[Xiaomi Inc. (1810 HK, BUY, TP HK$33) Target Price Change]: Good Result, and It Will Only Get Better
- Xiaomi reported CY3Q24 revenue, non-IFRS EBIT and non-IFRS net income 4.7%, 7.8%, and 16.6% vs. consensus.
- C4Q should be even stronger, as (1) appliance subsidy drive IoT revenue and margin improvement, (2) SU7 production output ~doubles
- We reiterate Xiaomi as our TOP BUY idea and raise Xiaomi’s TP to HK$ 33 to reflect the improved profit outlook. Our TP implies 26.6x CY25 P/E.
[Trip.com (TCOM US, BUY, TP US$74) Target Price Change]: C3Q24 Review: Domestic Story Back in Focus
- TCOM reported C3Q24 revenue 1.4%/1.6% higher than our est./cons., non-GAAP operating income is 12.5%/5.4% higher than our est./cons., mainly due to strong domestic sales and efficient cost control.
- We expect revenue growth to accelerate in 4Q24 and 2025,backed by domestic travel recovery and steady overseas expansion.AI powered cost saving bringing extra leverage in margin is an additional positive.
- We keep the stock as BUY rating and raise TP to US$74/ADS.
Why Ancora Thinks Harmonic Inc. Should Explore a Strategic Sale: What Investors Need to Know!
- Harmonic reported record results for the third quarter of 2024, with total company revenue and profitability exceeding expectations.
- The company’s Broadband and Video segments both contributed significantly to this performance, showcasing strong execution on business plans.
- The Broadband revenue reached $145.3 million, marking a 92% year-over-year increase and a 56% sequential increase.
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