Daily Brief Equity Bottom-Up: Adobe 2Q’23 Update and more

• Revenue: Digital Media net new ARR $470 Mn ($50 mn higher than guide).

• Gross Margin: Digital Media gross margin remains steady at ~96%, but Digital Experience posted its highest ever gross margin of 67.3% in 2Q’23.

• Cost Structure: 2Q’23 GAAP operating margin was 33.7%, down from 34.9% in 2Q’22.

• Uchi Technologies (UCHI MK), a manufacturer of controllers for coffee machines, has a 23-year track record of operating margins of over 40% and ROCEs of over 20%.  
• Trading at 11.9x trailing PE, with a dividend yield of 9%, and 15% of the market cap in cash, the company has been serially paying dividends (payout > 70%). 
• In its 2022 annual report, for the first time in its history, the company mentioned it has exciting growth plans that will be revealed over the year. 

• In this insight, we provide gap trade opportunities among 30 small cap Korean preferred stocks with market cap of less than 100 billion won and more than 20 billion won.
• Among these 30 companies, there are some in interesting gap trade opportunities, especially among those with relatively high dividend yields (more than 5%).
• We have ranked these 30 stocks in terms of three criteria including market cap, pref/common share price ratio, and dividend yields. 

• Electric-vehicle maker Nio Inc. ended its holdout in China’s car price war and slashed base prices on all of its vehicles by 30,000 yuan ($4,200) in hopes of bolstering sales amid escalating competition in China, the world’s largest auto market.
• Nio also pulled the plug on its free battery-exchange service for car buyers and introduced a pay-as-you-go system and a 30,000 yuan lifetime swap service.
• The vehicle price cuts announced Monday will reduce the starting price of Nio’s new electric SUV ES6 to 338,000 yuan. The price of the mid-size electric sedan model ET5 will be lowered to 298,000 yuan. The changes take effect immediately, Nio said.

• First of all, Apple is the most valuable company on the planet with a $2.8 trillion market capitalisation and eying for the whooping $3 trillion: +41% in 2023 alone.
• And that equates to a total return in the last 10 years of a whooping 1,266%! Note also it was not a smooth run with some big drawdowns which even they had: 2016: 32%, 2019: 39%
• Key take-away: business ownership vs stock ticker mentality is key …

• ECVT has experienced a series of block trades over the past year after its largest shareholder decided to liquidate its position.
• The block sales overshadow the second quarter that is expected to show a rebound in ECVT’s ecoservices
• For second quarter 2023 we are raising our sales and adjusted EBITDA estimate

Immix Biopharma has completed its $5.0m at-the-market (ATM) offering program. The funding is as a result of the initial share sales agreement in March 2023 and is anticipated to further support Immix’s pipeline activities with the development of its key assets: the CAR-T treatment, NXC-201, and the tissue-specific therapeutic, IMX-110. We view the ATM offering as a positive, especially in light of the current macro funding environment for biotech companies.

• Kimberly-Clark’s disappointing performance in recent years is hardly a surprise and does not make the company a bargain.
• The short-term perspective on margins remains mixed, in spite of the management’s optimism.
• KMB could no longer support these activities, according to the company’s management.

• Applied Materials managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
• Despite weaknesses in consumer electronics, the company sees robust demand driven by technology inflections and regional supply chain investments.
• Applied Materials noted that leading-edge foundry logic customers have adjusted their spending plans but remain committed to their long-term roadmaps.

• Marvell managed to exceed analyst expectations in terms of revenue as well as earnings.
• The company sees significant opportunities in the AI sector, as AI data centers require high-capacity, low-latency connectivity, driving demand for Marvell’s PAM4 optical DSP platform.
• Marvell expects the AI trend to continue growing, with plans to double revenue in fiscal 2024 and at least double it again in fiscal 2025.