In today’s briefing:
- Alibaba (9988 HK): Core Segments Moving Into The Right Direction
- Tech Supply Chain Tracker (17-May-2024): Microsoft China AI teams may relocate due to US restrictions.
- [Alibaba (BABA US, BUY, TP US$85) Review]: Positive Transformation Still Underway…BUY on Dip
- Sea Limited (SE US) – Making Hay
- Mitsui E&S – Near Record ROE as Profit Continues to Expand From Multiple Drivers
- Asian Dividend Gems: DGB Financial Group
- JSW Energy: Powering India’s Future
- Eisai Co Ltd (4523 JP): Leqembi Is Gathering Momentum; Imminent Competition May Spoil the Party
- Nissin Corp (9066) – A Dirt Cheap $400m JP Logistics Company…
- Taiwan Tech Weekly: All Eyes on Nvidia Results Next Week; Microsoft Copilot Edge AI To Be Showcased?
Alibaba (9988 HK): Core Segments Moving Into The Right Direction
- On first look, Alibaba Group Holding (9988 HK) missed on margins in 4QFY24 as adjusted EBITA declined by 5% yoy.
- We can give the company the benefit of the doubt given that the important segments of the company are heading into the right direction.
- Alibaba returned USD13.4bn and USD16.5bn to shareholders in FY23 and FY24, compared to the current market cap of USD197bn
Tech Supply Chain Tracker (17-May-2024): Microsoft China AI teams may relocate due to US restrictions.
- Microsoft’s China AI teams relocate due to US rules, focusing on Wi-Fi 7 development for improved connectivity and performance.
- Amazon’s stake in Alchip suggests potential synergy in AI tech and expanded market reach, while Kymco launches eco-friendly e-scooter.
- Tencent Cloud partners with BRI and Hi Cloud Indo for banking innovation, while Veolia opens first regeneration plant in China for sustainable water treatment. Tron Future secures funding for counter-drone tech.
[Alibaba (BABA US, BUY, TP US$85) Review]: Positive Transformation Still Underway…BUY on Dip
- BABA reported CY1Q24 top line, GAAP operating profit and non-GAAP net income 0.9%, (4.6%) and (6.7%) vs. consensus, and in-line, in-line, (6.9%) vs. our estimate;
- Results reaffirmed our positive view as increased investment is leading to significant improvement in key businesses: (1) Taobao/Tmall stabilized, (2) overseas e-commerce accelerated along with overseas AntFin and Cainiao
- We expect pay-off from its strategy shift in 2H of the year. Spin-off, dividends,and share buy-backs provide valuation support until then.We maintain BUY and US$85 TP, implying 9.5x CY25 P/E.
Sea Limited (SE US) – Making Hay
- Sea Limited (SE US) booked a strong set of 1Q2024 results from a GMV, revenue and adjusted EBITDA perspective, with fears of greater competition from TikTok failing to materialise.
- The company has been investing in growth across all segments, with e-commerce driving and digital financial services driving growth but digital entertainment also seeing a return to growth mode.
- Sea Limited continues to focus on its core competitiveness in pricing, improving service quality, and lowering the cost to serve through SPX Express, with advertising becoming a more meaningful contributor.
Mitsui E&S – Near Record ROE as Profit Continues to Expand From Multiple Drivers
- Profit continues to expand at Mitsui E&S after its transition to a holding company, now reporting over 400% profit growth for 9 months YTD.
- The company is doing well to keep its operating costs down, with an improving funding structure and balance, as its revenue grows more than COGs.
- We wonder if there will be more revisions upward to profit, with new initiatives and with a more proven recent track record.
Asian Dividend Gems: DGB Financial Group
- On 16 May, it was reported that the Korean financial regulators have approved DGB Daegu Bank to become the 7th commercial bank in Korea.
- DGB Daegu Bank is the core entity of DGB Financial Group (139130 KS) which currently has a market cap of 1.4 trillion won (US$1.0 billion).
- This change will allow the company to expand in the more lucrative metropolitan Seoul and other regions in Korea. We have a positive view of DGB Financial Group (139130 KS).
JSW Energy: Powering India’s Future
- A Detailed understanding of Thermal cum Renewable Power house JSW Energy Ltd (JSW IN) Business and their ambitious target to achieve 10 GW by FY25.
- Strategy 2.O, where company is planning for 20GW by 2025, energy storage system.
- JSW Energy’s strategic acquisitions and focus on renewables enhance growth prospects, with a vision to become a leading renewable energy provider.
Eisai Co Ltd (4523 JP): Leqembi Is Gathering Momentum; Imminent Competition May Spoil the Party
- Eisai Co Ltd (4523 JP) has guided for FY25 Leqembi revenue of ¥56.5B (~$366M), with ¥43.5B from U.S., and ¥10.0B from Japan. In FY24, Leqembi reported worldwide revenue of ¥4.2B.
- Leqembi is expected to grow significantly due to increase in prescriptions following the progress in the development of AD diagnosis and treatment pathways in the U.S. and Japan.
- The current rally can be short lived, as the competitor drug is expected to get FDA approval in 3Q24.
Nissin Corp (9066) – A Dirt Cheap $400m JP Logistics Company…
- Nissin Corp (TYO 9066) bought back 23.6% of their outstanding shares in a single day on May 10th and also doubled their dividend.
- The result? The stock went up about 39% (up 72% YTD).
- I already had a full sized position in Nissin Corp and despite being up big on it I added to my position at ¥4,265.
Taiwan Tech Weekly: All Eyes on Nvidia Results Next Week; Microsoft Copilot Edge AI To Be Showcased?
- Taiwan Tech and Nvidia Rally Ahead of Nvidia Earnings Next Week; Microsoft Build Conference Could Showcase Edge AI Copilot
- Hon Hai: Traditional Server Market Now Adding to AI Growth; Expects Market Share Gains in 2024E
- Asustek: Margin Beat, Guides More Upside; Qualcomm for AI PCs; Why Asus Confident in AI PC Up-Cycle
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