In today’s briefing:
- Alibaba (9988 HK): 4Q24, Main Business Began to Grow
- Tencent (700 HK): 1Q24, Highest Margin in Seven Years
- Intel’s Foundry Chief Runs For The Hills
- Tencent: Online Advertising and High-Margin Businesses Support Earnings
- Asian Dividend Gems: Cheerwin – Number One Provider of Mosquito Repellents in China
- Grab Holdings (GRAB US) – Rich in Initiatives
- Bajaj Finance (BAF): Strengthening Franchise to Sustain Growth Longevity
- Atlas Arteria (ALX AU): IFM Ups Stake As Shares Waver
- Tech Supply Chain Tracker (15-May-2024): Taiwan announces IC Taiwan Grand Challenge Competition.
- GHCL Textile Q4 FY24 Update
Alibaba (9988 HK): 4Q24, Main Business Began to Grow
- Customer management as the largest business began to increase compared to the past two stagnant quarters.
- We believe margin will continue to decline as the company turned its focus to growth.
- We conclude an upside of 41% for March 2025 based on peer companies’ P/S ratios.
Tencent (700 HK): 1Q24, Highest Margin in Seven Years
- The operating margin in 1Q24 reached the highest since 2Q16, as the gross margins of all businesses improved.
- The growth rate of online advertising is high than our estimate, but the growth rate of FinTech is lower than our estimate.
- We believe there is still an upside of 9% and the price target will be HK$415 for the end of 2024.
Intel’s Foundry Chief Runs For The Hills
- In a surprise move, Intel announced that its foundry chief Stuart Pann is to retire from the company effective end of May after just over one year in the role
- He will be replaced by former IBM, Globalfoundries and Marvell executive Kevin O’Buckley, effective immediately
- Mr. O’Buckley now has the dubious distinction of being the third leader of IFS in as many years.
Tencent: Online Advertising and High-Margin Businesses Support Earnings
- Tencent (700 HK) reported 1Q2024 results today. Both revenues and OP grew 6.3% and 30.0% YoY respectively and beat consensus estimates.
- Though domestic games revenues declined YoY, there were signs of recovery in Tencent’s gaming business. Online advertising saw strong growth despite 1Q being a seasonally weak quarter for Tencent.
- Tencent’s investments in high-margin products have helped boost the company’s margins across all business segments.
Asian Dividend Gems: Cheerwin – Number One Provider of Mosquito Repellents in China
- Cheerwin is a strong turnaround story with significant earnings growth in 2023 with solid dividend yield. It is the number one player in the inspect repellent sector in China.
- Cheerwin’s current price is 79% lower than the IPO price. However, Cheerwin’s shares are up 35% YTD, sharply outperforming Hang Seng index which is up 13.6% YTD.
- We found Cheerwin (6601 HK) using Smartkarma’s Smart Score Screener system. We used the following screening methodology: Market cap – More than $300 million Dividends = 5 only.
Grab Holdings (GRAB US) – Rich in Initiatives
- Grab‘s focus last year was offering more affordable products, which helped to increase its addressable market. FY2024 will see the rollout of a broader range of initiatives across economic segments.
- This year Grab is rolling out more premium offerings and new initiatives, including advance bookings, family accounts, increased reviews, and new merchant features to grow revenue streams from advertising.
- The upcoming results are likely to reflect seasonal factors but should also reveal something about Grab’s new initiatives and the changing competitive environment, with GoTo investing more aggressively.
Bajaj Finance (BAF): Strengthening Franchise to Sustain Growth Longevity
- BAF reported a decent Q4FY24 led by strong AUM growth and robust customer acquisition. Adjusted for the impact of the regulatory ban, Q4FY24 results were in line with the expectation.
- The biggest negative surprise in Q4FY24 was the 21bp NIM compression. NIM compressed led by AUM composition shifting incrementally to secured assets.
- BAF is optimistic on growth across segments, except Rural B2C where risk metrics are somewhat elevated; however this should normalize, given Rural B2B is doing fine.
Atlas Arteria (ALX AU): IFM Ups Stake As Shares Waver
- Back in June 2022, US/Europe toll-road play Atlas Arteria (ALX AU) (ATLIX) rejected IFM Global Infrastructure’s request for limited company information, before deciding whether to submit a non-binding indicative proposal.
- Undeterred, IFM, which held 15% of shares out at the time, bumped its stake to 19% two months later; and has continued to capitalise on Australia’s creep provisions ever since.
- This morning, IFM is understood to have lifted its stake to ~26.5%, in an apparent attempt to gain additional board representation. Another tilt cannot be ruled out.
Tech Supply Chain Tracker (15-May-2024): Taiwan announces IC Taiwan Grand Challenge Competition.
- Taiwan launches IC Taiwan Grand Challenge to attract innovative teams and talent, offering opportunities to showcase skills and win prizes.
- Navigating AI investments during upgrades: on-premise or cloud computing? Make informed choices for hardware and software advancements.
- Taiwan’s LEO satellite program readiness questioned; virtual power plants used in Taiwan and Japan to mitigate earthquake risks; TPCA partners with Taiwanese industry association to boost talent and supply chains for Thai electronics manufacturing growth; Intel appoints new head of foundry services.
GHCL Textile Q4 FY24 Update
- GHCL Textiles (GHCLTEXT IN) Aiming 25-30% revenue growth along with 15-20% average margins significantly increase the profitability of the company.
- Entering into value-added products like Functional fabrics and setting up their own manufacturing plant for fabric.
- Management Guidance on yarn prices, capex and debt profile of the company.
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