Daily Brief Equity Bottom-Up: Ajanta Pharma (AJP IN): Starts FY24 With Healthy Branded Generics Growth and Improving Margins and more

• Ajanta Pharma (AJP IN) reported better-than-expected profitability in Q1FY24, due to softening of raw material prices and normalization of freight rates. EBITDA margin expanded 300bps YoY to 26%.
• Revenue increased 7% YoY to INR10B, driven by superior execution in branded generics business and lesser price erosion in the U.S. 73% of the total sales came from branded generic.
• Management maintained mid-teen revenue growth and EBITDA margin guidance of ~25% for FY24. Ajanta Pharma has a positive business outlook due to growing branded generic business and niche U.S. launches.

• August outbound travel activity surged against easy 2022 comps, but offered no surprises
• The pace of outbound capacity rebuild slowed in August — what do airlines see ahead?
• Is there really “pent-up” tourism demand among Chinese consumers? We don’t think so

• Tsuruha is the latest retailer to come under attack from an activist investment fund. 
• As with Seven & I, the company fended off demands to shake up its board, crucially with the support of Aeon, its largest stakeholder.
• The move will likely lead to some careful reconsideration of how Tsuruha and Aeon could work together and may even lead to a Welcia/Tsuruha merger.

Triple Point Social Housing (SOHO) reported solid H123 results. With borrowing costs fixed, growth in indexed rental income partly offset the impact of credit loss provisions against its two unperforming tenants. Progress is being made in resolving these issues, and as there is no read-across to the wider portfolio, we forecast full dividend cover through FY24. Meanwhile, with the demand for specialised supported housing remaining strong, SOHO has entered a partnership with one of the leading providers in the sector.

Games Workshop Group (GAW) enjoyed another record year of revenue and profit growth in FY23 despite the more challenging macroeconomic backdrop and economy-wide cost pressures. Underlying volume growth is testimony to the appeal of the IP to its hobbyists. GAW entered FY24 with strong revenue momentum, implying that the June 2023 release of Leviathan, the 10th edition of its most significant property, Warhammer 40K, has boosted growth in Q124. Easing cost pressures should be supportive of underlying margin progress, albeit the recent strength of sterling provides a headwind to growth if it persists through the year.

• Fee income is down 33% in the most recent quarter which may have prompted the bank to realize gains up 63% in the period to preserve profit growth
• Quality of earnings is not strong, with more than half of the bank’s pre-tax income delta driven by realized and unrealized gains, with credit cost decline the other key driver
• Loss NPLs are now 26% of total NPLs, from 11% a few year ago, suggesting worsening credit metrics. Declining credit costs seem at odds with economy, NPL distribution.

• Singapore received over 9 million tourist arrivals from the start of 2023 to end August, a 204.5% year-on-year increase.
• The 10 most actively traded stocks in the tourism and hospitality sectors have booked net institutional inflows of S$2 million, and returned an average 2.3% total returns in the year-to-date ending 21 Sep.
• International visitor arrivals to Singapore in August dipped slightly to 31 million in August, due to seasonality and after school holidays.

• Palantir Technologies maintained a GAAP operating income in Q2 and achieved GAAP profitability for the quarter.
• In Q2, Palantir closed deals in the US commercial market in about 30 sectors, including pharmaceuticals, energy, consumer goods, utilities, health care, construction, automotive, transportation infrastructure, etc.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Airbnb delivered a solid result and managed an all-around beat in the recent quarterwith over 115 million Nights and Experiences Booked, resulting in revenue of $2.5 billion, marking an 18% year-over-year growth.
• Net income for the quarter stood at $650 million, reflecting a net income margin of 26%, the highest second-quarter margin ever achieved.
• Additionally, free cash flow reached $900 million, a 13% increase from the previous year, with a trailing 12-month free cash flow of $3.9 billion and a margin of 43%.