In today’s briefing:
- AIA – Results 24 Aug, Cratering Mkt Cap Suggests Malaise, Earnings Base May Be Structurally Lower
- Westpac – Non-Performing Exposures in Australia Mortgages Surge in June & NZ Non-Performing Loans
- Wilmar’s Kuok Khoon Hong acquires 9 million shares
- [Alibaba (BABA US, BUY, TP US$127) TP Change]: The New Wanxiangtai Will Enhance the Take Rate
- REIT Watch – iEdge S-Reit Index vies for portfolio positioning
- Olympus Corp (7733 JP): Slow Start of FY24; Unfavorable Macro Backdrop Continues to Hurt Business
- Zhongsheng Group (881 HK): Could Be A Winner In The Long Run, But No Short-Term Visibility
- Earnings: MCHP and IFX, SIMO Rumors, SMCI, POWI, GFS, COHR, WOLF, AMAT, CSCO
- Monthly Chinese Express Tracker | July Growth Slows | Pricing Hits Record Low | (August 2023)
- SDRL: Attractive Value, PT to $62
AIA – Results 24 Aug, Cratering Mkt Cap Suggests Malaise, Earnings Base May Be Structurally Lower
- 1Q23 shows strong Value Of New Business (VONB), not sure of profit flow through
- Comparative to 1H22 is easy vs loss of USD556m in the period, but risk to downside
- Despite, stock buybacks, increased dividends market cap down 34% since peak this year
Westpac – Non-Performing Exposures in Australia Mortgages Surge in June & NZ Non-Performing Loans
- New release shows surge in Australia residential mortgage non-performing exposures QoQ
- From March 2023 to June 2023 these NPLs rose by 10.5% and this is not an annualized rate
- Its total NZ non-performing loans rose from AUD671m to AUD741m or 10.4% QoQ
Wilmar’s Kuok Khoon Hong acquires 9 million shares
- Share buybacks by primary listed companies 11 – 17 Aug 2023 Institutions were net buyers of Singapore stocks over the five trading sessions through to Aug 17, with S$256 million of net institutional inflow, while 21 primary-listed companies conducting buybacks with a total consideration of S$36 million.
- On Aug 15, QAF joint group managing director and executive director Lin Kejian acquired 450,000 shares at an average price of S$0.79 per share.
[Alibaba (BABA US, BUY, TP US$127) TP Change]: The New Wanxiangtai Will Enhance the Take Rate
- Taobao and Tmall have implemented two major reforms: 1) The launch of the Wanxiangtai Platform Unlimited Edition; 2) Changing the rules for displaying merchant sales volume from monthly to annual.
- Although the new Wanxiangtai differs from PDD’s “Fangxintui” and “Quanzhantui” , the idea is to simplify and automate merchant promotion. We anticipate that this change will boost the take rate.
- We increased our core e-commerce take rate estimate for BABA in FY24/FY25 to 3.85%/4.0%, respectively, and raised our TP to US$ 127.
REIT Watch – iEdge S-Reit Index vies for portfolio positioning
- 10 largest weights of the iEdge S-Reit Index THE FTSE EPRA Nareit Developed Index is designed to track the performance of listed real estate companies and real estate investment trusts (Reits) worldwide.
- The 10 largest weights of the iEdge S-Reit Index make up close to 70 per cent of the index weights.
Olympus Corp (7733 JP): Slow Start of FY24; Unfavorable Macro Backdrop Continues to Hurt Business
- Olympus Corp (7733 JP) announced muted Q1FY24 result. Revenue increased 8% YoY to ¥208B, while operating profit declined 50% YoY to ¥22B. A one-time gain has inflated the net profit.
- Revenue missed about 3% compared to the plan. Product shipment hold and parts supply shortages represented about 1.5% points out of the total miss of 3%.
- Olympus has reiterated FY24 guidance and expects FY24 revenue of ¥914B (+4% YoY) and operating profit of ¥163B (-13% YoY). In FY23, the company missed operating profit guidance.
Zhongsheng Group (881 HK): Could Be A Winner In The Long Run, But No Short-Term Visibility
- China MeiDong Auto (1268 HK) announced a profit warning this morning, expecting a 90% decline in net profit for 1H23.
- Luxury auto dealer in China is facing major uncertainties in its business model, with no visibility in the near term.
- However, Zhongsheng Group (881 HK) currently employs the best long-term strategy amidst industry transformation. Suggest to keep a close eye on the name.
Earnings: MCHP and IFX, SIMO Rumors, SMCI, POWI, GFS, COHR, WOLF, AMAT, CSCO
Infineon’s big news is that they, too, will be building one of the largest Silicon Carbide fabs in the world. This makes Wolfspeed’s Siler City look puny in comparison.
- Infineon is now looking to be number three in the Silicon Carbide device game, targeting ~500 million in 2023.
- So given the impressive growth, Infineon is a bit late but plans to spend 5 billion dollars over five years for the factory in Kulim.
Monthly Chinese Express Tracker | July Growth Slows | Pricing Hits Record Low | (August 2023)
- Chinese express parcel volume growth was 11.7% in July, far slower than in Feb-May
- July ASP for all segments fell to 8.84 Yuan per piece, the lowest in at least ten years
- Industry leader SF Holding partly insulated from margin pressure by air, international
SDRL: Attractive Value, PT to $62
- SDRL reporting second quarter results provided greater insight on the contribution of Aquadrill to SDRL’s financials and sets the course for how the business could benefit from current day rates
- SDRL has two drill ships set for contract expiration at year end and another two more vessels expected off contract by end of 2024, not including those with contract options
- Our new price target of $62 from $50 values SDRL in line with its peers even though SDRL is not levered
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